Posts Tagged ‘Swedish shares’

This post is the result of a joint collaboration by C.E.S.I., Se7en (blogger at and Martini (blogger at The original author Martini has published a very similar article on (swedish language). The original author Martini has also granted the following permissions: English translation of original manuscript (performed by Se7en), Editing and Publication at (performed by C.E.S.I). Further information can be provided by

Initial Teasers

Recently Huawei Ascend Mate 7 was presented at the IFA in Berlin and these two quotes summarize just about everything:

The fingerprint scanner is the star of the show here, working wonderfully well” –

“I love it, I really love this functionality!” – Richard Yu – CEO, Huawei (Start watching at 45 min to check out the FPC One Touch feature in Mate 7)

Background – Why is Fingerprint Cards a promising company and a good investment?

It’s all about supply and demand. It’s as natural as the earth’s most populated country, China with 1.35 billion people. In Sweden 9.45 million people are living, which compared to China accounts for only 0.7% of potential smartphone market measured by number of inhabitants.

The Chinese market of about 1 billion mobile subscriptions is hard to grasp, and it is now three times as large as that in the United States. Just a year ago, the Chinese and American smartphone market were equal. FPC has been active in the Chinese banking sector for 17 years. Now, FPC has established itself in the massively expanding smartphone market in China.

China Mobile with over 700 million mobile subscriptions builds out its 4G network, also known as TD-LTE, with over 500,000 base stations in over 340 cities. The goal is to finalize its new infrastructure during the current year. Smartphone sales have exceeded expectations in the 16 cities that have 4G services, such as Beijing and Shanghai. 41% of China Mobile’s customers are now switching out their old cell phone to a smartphone, and of those, 79% android.

On March 13th the News Agency Finwire summaries this expansion as “The number of active smartphones and tablets close to doubled in China over 2013 total was more than 700 million devices active at the end of 2013, up from 380 million in the first quarter of that year. It appears from a new report from Umeng.”

Introduction of Huawei Mate 7 amazes the world

After the introduction of the very first Android smartphone featuring a fingerprint touch sensor on IFA in Berlin 2014, the tech blogs literally exploded with positive comments, see below for a handful of quotes:

“The fingerprint scanner is the star of the show here, working wonderfully well”


“Reliable and screen turns on quickly”

“It’s a legitimately impressive sensor”

“Its really cool technology”

“The fingerprint scanner on the back of the Mate 7 is nothing short of perfect.” the-mate-7-at-ifa/

The fingerprint reader, developed in cooperation with Swedish FPC, works very fast and good and in addition, Huawei has associated a lot of interesting features to it. You can unlock your phone instantly by putting your finger on the fingerprint reader and need not first pressing another button on the phone. Additionally, you can register impressions from more than one finger, and linking them to your user account on your phone. Different fingerprints can then be used to lock and unlock certain features depending on which finger you use. A perfect feature if you for instance lend your phone to someone you do not want to be able to snoop through your private messages or images.

150,000 employees – the world’s third largest smartphone manufacturer

Huawei: “Consumer Business: Serving more than 500 operators around the world, Huawei’s Consumer Business offers a suite of user-friendly mobile phones, mobile broadband devices and home devices. It aims to become one of the leading global mobile phone brands by 2015. The business group recorded a sales revenue of $9.4 bn in 2013, which represents an impressive year-on-year growth.”

Huawei’s strategy is to reduce the number of smartphones to 5 models from the previous 20 models. They have also embraced the FPC way to add a plus for the expected forecast sales. In this case, they estimated the number of smartphones sold in 2014 at 80 million plus. They also anticipate increased market share of around 7% per year. Today they have 7% of the global market, i.e. they are aiming to sell 100% more smartphones in 2015! The goal is to own 25% of the market within 2-3 years.

Global Market Outlook

FPC published the below market outlook in March for smartphones and tablets over the next coming years. In this forecast, FPC has not included smart cards, debit cards, and other product of the total available market.

TAM – Total Addressable Market

$ 1.4 billion in 2014 = about 9 billion SEK

$ 2.8 billion in 2015 = about 18 billion SEK

$ 4.8 billion in 2016 = approx 31 billion SEK

1 USD = 6.35 SEK (current rate is 7.09 SEK)

Average price per sensor is 4 USD: swipe sensor 1.5-3 USD/pc, touch sensor 5-7 USD/pc.

FPC aims to supply 60% of the touch sensor market in 2014. In 2015, the goal is 50% of the touch sensor market. FPC’s swipe sensor dominated the market with 95.4% of all smartphones launched in 2013. It is also expected to achieve an EBITDA of about 20% for 2014. If FPC meet their forecasts, the stock is very cheap at the moment. How does it look if we for example reduce its market share to 30%? See the calculation examples below:

2014: 9 billion x 30% market share x earnings, EBITDA 20% / 55 million. PE shares x 25 = 245 SEK / share

2015: 18 billion x 30% market share x earnings, EBITDA 30% / 60 million. PE shares x 20 = 540 SEK / share

2016: 31 billion x 30% market share x earnings, EBITDA 30% / 65 million. PE shares x 20 = 858 SEK / share

Worth noting is that the FPC has a negative PE’s as of today at -39.9, and the market has been waiting for patent examinations through FIDO alliance, which may lead to a delay of the above calculation forecast.

However, this very promising quote was delivered from the CEO at the FPC’s Annual General Meeting in Gothenburg:

“Those big customers we handle ourselves… The tens of millions of sensors will be delivered this year, and next year up to several hundred million sensors. ”


“Every member of the FIDO alliance must have agreed on the patents. Everybody is reviewing the specifications, to be sure, and believe me, I’m sure there are a lot of patent lawers that are looking at this. There is a review before it is published. We are very hopeful because there are no surprises, everyone has been involved in this work, so once that review period is over, then we expect that the first version of the specifications will be released. Version One specification will be introduced during the first two months in 2014.”

Alibaba = Huawei Ascend Mate 7 = Fingerprint Cards

“Alibaba, founded by billionaire and one-time Forbes cover story subject Jack Ma teamed up with Chinese telecoms outfit Huawei to integrate this new biometric technology into its Alipay Wallet app.

It’ll be available for use with Huawei’s Mate 7 smartphone, due to be launched this week.”


Apple e-commerce

Apple has focused on reducing the fees associated with credit card payments. Apple has an agreement with VISA, MasterCard and American Express. On September 9 2014, Apple launched its new flagship, of course fitted their new payment system.

“The first thing Apple has done is convince these four FIS to Consider transactions from Apple’s upcoming payments venture – said to launch with its forthcoming iPhone 6 introduction – as “card present” transactions, which carry a lower discount rate than “card-Not-present” transactions, because of lower fraud risk.”

Statement from the CEO of FPC after the launch of Huawei Mate 7

“Huawei, the world’s third-largest smartphone manufacturer, today launched its new flagship model Huawei Mate 7 with an integrated touch sensor from Fingerprint Cards. It is seen as an important breakthrough for Fingerprint Cards” and the company’s CEO continues and says that “interest from the other major manufacturers now will increase significantly.”

Huawei becomes the first Android manufacturer to launch a smartphone with touch sensor. Among the giants, Samsung has previously chosen line sensors from Synaptics, Fingerprint Cards american competitor.—vd

The market offers the same undeniable information – pin codes will be replaced with your fingerprint. The technical and the legal platforms are ready thanks to FIDO Alliance (Fixed Identity Online). Apple, Samsung and Huawei have now shown that fingerprint sensors are a standard component to be reckoned with in all smartphones.

C.E.S.I. summary

Today´s excellent share price discount is due the latest media news i. e. the CEO´s suspected illegal insider trading. According to C.E.S.I., these suspects should have only minor influence of the company´s fundamenta in a medium and long term perspective.

C.E.S.I. believes in the following Warren Buffet quote:

“We don’t do due diligence or go out kicking tires. It doesn’t matter. What matters is understanding the competitive dynamics of a business. We can’t be taken by a guy with a sales pitch… What really counts is the presence of a competitive advantage. You want a business with a big castle and a moat around it, and you want that moat to widen over time. Coke and Kodak both had marvelous moats 20 or 25 years ago. Kodak’s has narrowed, while Coke has been building its moat. We want an economic castle. The best thing that happens to us is when a great company gets into temporary trouble… We want to buy them when they’re on the operating table.”

Best regards C.E.S.I., Se7en and Martini

The author, Cutting Edge Science Invest, is a Fingerprint Cards share holder. The author does not intend to sell any shares within a near future (= weeks)

Cutting Edge Science Invest can not guarantee, or take into  accountability, the content of truth and accuracy of the information in this article/post.Thus, Cutting Edge Science Invest requires that a possible reader gather complimentary information if any type of investment in the company described above is considered.

Cutting Edge Science Invest provides personally biased information and at best also “general information and opinions”.

The article/post does not contain professional investment advice. 

Surprisingly, the author of (an anonymous retired policeman), easily convinced C.E.S.I. to buy SinterCast shares today. 

C.E.S.I. stumbled across this site in a high quality Redeye blogg post submitted by the alias “Bengtsson” (swedish language, links in english)…

And in a second Redeye article by “Bengtsson”, I read (translated by C.E.S.I):

“One of the world’s greatest entrepreneur, Bill Gates, is the largest investor in the legendary engine technology project which apparently will revolutionize the motor industry. Or how about a spirited five-seater family car with 0.23 L per mil in consumption, resulting in lower CO2 load than electric car. Industry insider John Mortimer’s report just recently leads to the conclusion that the engines are made in CGI. This is dynamite for Swedish SinterCast. The starting gun fires this autumn.”  (swedish, links in english) (swedish, links in english)

Consensus: Eco motors may be the end customer for the Sintercast press release January 16, 2014.

Zhongding Power is granted the Eco motors licence.

( )

“Bengtsson” also highlights that SinterCast also recently has been highlighted by Björn Davegårdh, an experienced swedish analyst (September 1, 2014).

“CGI is used mainly in the engine block and has superior properties, and weighs less than other materials. Contrary to what many believe goes Sintercast now a profit even if it is modest. Now scaled up production and is located on an annual rate of 1.8 million Engine Equivalents (equivalent passenger car engines) per year. It will gradually increase to 2.4 million Engine. It also includes Ford’s new gasoline engine. It happens a lot in Sintercast with new installations and collaborations in China. 2019 counts Sintercast with a volume of 4.7 million equivalent to about 125 million in revenue. This places the results at around 90 million SEK. Added to this is completely new engine that we currently do not know much about. In addition, more and more components, in addition to the engine block, that is produced in CGI. Moreover, if the so-called OPOC engine becomes a success, it can be really fun.” (swedish language)

Ok, let´s finally replace the hype, hypotheses and estimates with some plain facts:

SinterCast, General information ( SinterCast is the world leading supplier of on-line process control technology and know-how for the reliable high-volume production of Compacted Graphite Iron (CGI).  Together with strategic partnerships for component design, rapid prototyping and high volume machining, we bring foundry experience and CGI materials expertise to every aspect of every CGI program.  SinterCast provides CGI solutions to the world foundry and automotive industries. SinterCast is a publicly listed company on the NASDAQ OMX Stockholm stock exchange.

Video link below (Aug, 2014): SinterCast’s CEO Steve Dawson gives an update on the current state of the business, comments on the progress of the installations that were announced earlier this year and toward the end of 2013. He also describes the status of the installation that was delivered to Mexico, why the previous total market opportunity estimate isn’t included in the Q2 report and lastly what the background is for the increase in the deferred tax asset during the quarter.

Compacted Graphite Iron (CGI) provides at least 75% higher tensile, 40% higher stiffness and approximately double the fatigue strength of conventional grey cast iron or aluminium alloys.  The fatigue strength of CGI is up to five times higher than that of aluminium at elevated temperatures.  In comparison to ductile iron, CGI provides superior castability, thermal conductivity and machinability.  These combined properties of CGI offer cost-effective solutions for complex components that are subjected to mechanical and/or thermal loading.

Business Model. SinterCast sells or leases the System 3000 hardware, software, leases, sells supplies for sampling and charge a production fee for each tonne of castings produced using the SinterCast technology. Revenue is also derived from spare parts, service, field trials and sales of test pieces. The total running fees (sampling consumables plus Production Fee) depend on the ladle size and the casting yield for each foundry and each product. A typical cylinder block produces a revenue of around EUR 40-50 per tonne of castings, corresponding to 2.00 to 2.50 Euro for each 50 kg Engine. SinterCast business model is highly scalable, allowing profitability to rise as the installed base grows and as more products enter series production. (swedish language)

Compared to previous years, the net turnaround has increased:

Technical analysis “Best Fit Change Line”. The following chart estimates an ordinary least squares regression model for SINTERCAST applied against its price change over selected period. The best fit line has a slop of + 0.59 which means SINTERCAST will continue generating value for investors. It has 44 observation points and a regression sum of squares at 611.9, which is the sum of squared deviations for the predicted SINTERCAST price change compared to its average price change.–technical–SINTERCAST

Current Sintercast status

  • 23 fully automated process control systems and 16 mini-systems installed in 12 countries and supported in 10 languages
  • More than 55 components in series production
  • Approximately 2 million castings produced and 118,500 Sampling Cups shipped in 2013
  • Series production for passenger vehicle, commercial vehicle and industrial power applications.

C.E.S.I. is thrilled to be a new SinterCast share holder.

Best regards, C.E.S.I.

The author, Cutting Edge Science Invest, is a SinterCast share holder. The author does not intend to sell any shares within a near future (= weeks)

Cutting Edge Science Invest can not guarantee, or take into  accountability, the content of truth and accuracy of the information in this article/post.Thus, Cutting Edge Science Invest requires that a possible reader gather complimentary information if any type of investment in the company described above is considered.

Cutting Edge Science Invest provides personally biased information and at best also “general information and opinions”.

The article/post does not contain professional investment advices.