Tekcapital shares undervalued compared to NAV after year of progress for portfolio companies

Tekcapital has released final results for the year ending 31st December 2022 and provided a summary of progress for their portfolio companies during the period.

Tekcapital is an investment company holding both listed and private companies. Portfolio companies include MicroSalt, Innovative Eyewear, Belluscura, and Guident.

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During the period, Tekcapital’s portfolio NAV eased to 31p compared to a current share price of 13p.

Tekcapital portfolio companies

Over the past year, Tekcapital portfolio companies recorded material commercial progress. MicroSalt is now stocked in thousands of US stores, and Innovative Eyewear launched the world’s first ChatGPT-enabled.

Guident will soon roll out its remote monitoring and control (RMCC) for the Jacksonville Transportation Authority and is undergoing testing of its regenerative shock absorbers.

MicroSalt has signed several distribution agreements with major US outlets, including Kroger and is now stocked in thousands of US stores. MicroSalt appointed Zeus Capital as an advisor for their AIM IPO at the end of 2022, and Tekcapital is unable to provide specific financials for the privately held company before the IPO. This will be included in MicroSalt’s prospectus.

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“The Group has made good progress during 2022. Our portfolio companies have demonstrated solid growth and we believe they should achieve additional significant milestones by the end of 2023,’ said Dr Clifford Gross

“Of note, Lucyd’s Innovative Eyewear Inc. subsidiary completed its flotation on the NASDAQ and raised US$7.3m in gross proceeds, in spite of a choppy year in the capital markets. Guident secured its first customer, the Jacksonville Transportation Authority for its remote monitoring and control (RMCC) service and has signed a letter of intent with its second customer, the Boca Raton Innovation Campus, to provide remote monitoring for its campus shuttle.

‘Additionally, Guident has made significant progress improving and fabricating its latest regenerative shock absorbers and has begun testing them with several Tier-1 companies.

“We are also pleased to highlight MicroSalt’s strong progress ending the year by growing its revenues, signing up additional customers and launching its low sodium saltshakers to an increasing number of supermarkets and engaging its advisory team for a prospective AIM IPO during 2023.”

Dr Gross continues to explain the macroeconomic picture’s impact on their portfolio’s value. Tekcapital’s listed portfolio companies are by their nature driven by general sentiment and softer economic conditions are evident in their share prices.

“Our financial results were negatively impacted by the reduction in the observable, closing share prices of both innovative Eyewear and Belluscura at the end of the period, which we believe were in large measure the result of exogenous macro-economic and capital market factors. These were partially offset by the approximate doubling of the share value of MicroSalt,” Gross said.

“We remain steadfast and excited about the commercial progress of our portfolio companies in 2022 and for their future prospects for the remainder of 2023. As per our mission and investment objective, we believe that all of our key portfolio companies have the potential to make a positive impact on the lives of the customers they serve as well as produce meaningful returns on invested capital for our shareholders over the mid to long term.” 

Tekcapital valuation

Tekcapital’s revised NAV highlights the deep value in the current Tekcapital share price. Tekcapital’s NAV per share was adjusted to $0.38 (31p) per share as of the end of 2022.

Tekcapital’s share price was 13p on Friday.

The opportunity for a near-term re-rate of MicroSalt’s NAV after the IPO could dramatically alter the NAV to the upside and make shares look even cheaper.

The Tekcapital team is optimistic about their portfolio’s underlying growth prospects, which could also see NAV revised higher in the coming periods.

“We believe we will see significant growth of our portfolio companies in 2023,” said CEO Dr Clifford Gross.

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