An Interview With The Trendlines Group
- Original Post from T.U.B Investing


Recently, I had emailed 2 separate companies' investor relations department. Both of the companies are in my portfolio but only 1 had replied. I am still waiting for the other company to reply...

For those that have been waiting for this interview, sorry for the delay.

Here it is - An Interview with The Trendlines Group!

Do note that some of the questions came from other investors of The Trendlines Group.

1. Trendlines Group (aka Trendlines) has a decrease in the portfolio value as per the latest financial statement. May I know if it is due to writing off of companies?

No companies were written off in Q2 2018.

Only one company was written off in Q1 2018 due to lack of sufficient technological advancement and funding (amounting to approximately US$0.8 million - reported in the Notes to Income on page 14 of our Unaudited Financial Statements Q1 2018).The decrease was mainly due to a decrease of US$2.3 million in the fair value of Stimatix GI Ltd., which was because of a change in the net present value of projected cash flow due to an adjustment in the discount rate used to calculate the present value and increased sales model accuracy as we observe the product launch.

As explained in our press release, the external valuation company uses the average of the 10-year and 20-year Corporate Bonds (Aa/AA) Median Yield, for the discount rate. As the market rates fluctuate, unrelated to the Stimatix GI Ltd. product, the company uses the updated rates, which had an effect on the calculation, but not necessarily reflects what will happen in reality.

2. As per the past and present presentation PowerPoint, Trendlines has shown that manyof the Top 10+1 companies have achieved FDA clearance. I understand that only withFDA clearance, then the product can be sold in USA. However, what happens if aproduct is unable to achieve FDA clearance? Will Trendlines still be able to sell in othermarkets?

Many companies apply for regulatory clearance in a number of markets – for example, CE for Europe, Amar for Israel and CFDA for China – depending on their marketing and commercialization strategy.

A company like ApiFix has multiple regulatory clearances in many countries and has performed over 230 surgical procedures (in Europe, Israel, Canada, Singapore) prior to FDA clearance.

3. In addition to the above question, what are the advantages and maybe the disadvantage of achieving FDA clearance?

The advantage is that receiving FDA clearance gives a company access to one of the biggest medical device markets (the US). I don’t think there are any disadvantages.

4. There are currently 49 companies in the portfolio. How many companies have been written off? Able to disclose the average amount of each company that was written off?

According to slide #16 of our investor presentation, which is available on the investor section of our website and updated every quarter, we have written off 30 portfolio companies since establishment.

We do not have a figure for the average amount of write-offs.

5. In addition to the above question, how many companies have Trendlines exited? What is the expected potential % increment for each future exit?

Trendlines has exited 8 companies. The details can be found on page #7 of our investor presentation and on this page of the investor section of our website:

As to the expected potential percentage, as you can see by the table, it varies greatly depending on the company, its market and the stage it was sold. This makes predictions on future exits and their potential very difficult.

6. It is stated that Stimatix was valued at over fifty million in the annual report by independent valuer. Is the methodology disclosed? What are the assumptions and inputs to the valuation model, such as projected sales, market share, margins etc?Knowing these will provide investors with info to judge on the valuation.

The valuation of Stimatix that appeared in our annual report for 31 December 2017 was US$ 42.6 million. We cannot disclose the inputs into the valuation methodology since they would require us to reveal confidential B. Braun information.

In general, our fair value measurement is explained in Note 6 of the Financial Statements, page 110 of the Annual Report for FY2017.

7. How long will the royalties of Stimatix last? 10 years or 20 years? That will give us a rough guide of how much the dividend will be based on its current valuation of over 50M SGD.

B. Braun agreed to be disclosed as the acquirer of Stimatix GI, but not to disclose the terms of the deal. As we respect their right as a private company not to disclose this, we are unable to comment on this.

8. This is a question regarding one of the ostomy competitor's product, TIES, which uses a titanium ring implant. How is it comparable to Stimatix AOS 2000? In addition, is this a direct threat to their share in the ostomy market? Are there any other new products in the market that are affecting their Stimatix valuation?

The TIES product claims to be for ileostomy patients, while the Stimatix product is for colostomy patients; these are two different segments of the ostomy market. Moreover, the TIES product seems to require a surgical procedure since it is an implant, while the Stimatix product does not require any additional surgical procedure.

9. Apifix has applied for US FDA for its device Mid-C in April 2018, and a study (still recruiting) will be conducted within the period ending in 2022. Does that mean any exit will only come after it obtains the FDA?

Not necessarily. Other companies have exited prior to receiving FDA clearance, but FDA clearance is frequently considered an important inflection point.

10. How long is the average period between adding a company to the portfolio and then potentially getting an FDA and then exiting?

Again, this is very difficult to predict as each company functions in a different market.

Some companies, such as Gordian Surgical received FDA clearance within 4 years of its establishment, but other may take longer. As noted above, FDA is not necessarily a perquisite for exiting.

11. 2 senior executives (CFO/VP BD) had left the company this year. Is it something related to restructuring or the actions taken by the company to strengthen strategic support by these senior roles? or the two left on voluntary basis?

As we noted in the announcements that we published, in both cases the cessation of their work at Trendlines was not connected to the restructuring or cost-reduction program. Gabi Heller and Moshe Katzenelson both left on a voluntary basis to pursue other professional directions.

12. The placement done last year to institutions/wealthy individuals' subscriptions at 14.03 cents were supposed to provide some support/or even boost the share price, but it obviously did not turn out that way - the price has further deteriorated since then. Are these institutions/private investors still hanging on?

We cannot release any information about our shareholders, other than what is publicly available.

13. Is there any share buy-back plan in place?

No, not at this time.

In Short

I do hope that. after reading this interview, investors will have a better understanding of The Trendlines Group.As of now, I am still vested in the company and mostly will stay an investor for some time. I guess, as I had said previously, do not expect short term gains if you are vested in this company. This is a very long term investment.

Please do your own due diligence before you invest this counter (if you knew what it is).

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information!

We have also released the Moat Scorecard with InvestingNote. Do take a look!

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In the latest presentation slides, the company has highlighted 5 companies (including stimatix gi). I think the next company to be acquired could be Apifix or Leviticus Cardio, which they have been holding for more than 7 years, anything more than 10 years is too long for an investor to see fruits, at least for me, should be ripe for harvest soon, especially Apifix with the appointment of the new chairman Ed Roschak, the former CEO of Ellipse Technologies, since the beginning of the year. Leviticus needs to wait for it's FIH test which will take months again. I was also wondering why they keep saying the launch of the stoma bag is on schedule ( suppose to be mid 2018), but still there isn't any words from B Braun. That doesn't bode well with investors.


Reply to @ozxinvest : No words from B Braun yet. But the word is it's on schedule. Good to wait till I think Oct.


thanks for sharing.
Went for their agm, many shareholders asked abt the royalities .....their lips r very tight on the figure. I am wondering, how will they classify the figure in the annual/quarter report, so that we get a clearer picture of what kinda of dividend we are expecting.

We are on the same page that trendlines is for long term.
Waiting for exits n capital distributions...


Reply to @Liang_Soon_Fong : I seriously think we should look at 2019.


Cool bro tkx for the information!!!


Reply to @smurfy : No problem


Thanks for asking and sharing


Thanks for sharing sir.


Reply to @learningboy1988 : No sir lah. haha

Recommended & Related Posts


For those waiting for my updates on the answer to the questions passed to me, you will most probably need to wait till this weekend or so. Because I wanted to write an article on them and I actually only re-send them the questions to reply me in an email yesterday instead.

But basically for the company, what I felt is that there is no possible catalyst to push the share price up significantly other than the Stimatix dividend in the near term. In my opinion, the dividend that could possibly be given will also be very very tiny.

If you are looking at exits, next year seems more possible than this year.

Like I had always stated (just my opinion), if you held the shares and can wait for another year, then just wait.

This company contributes only 2% of my portfolio.

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What's My Current View On The Trendlines Group Ltd?
- Original Post from T.U.B Investing


This article may have came a bit too late.

I felt I have to write another article about The Trendlines Group Ltd (Trendlines) after my last post on them, as well as my very bold estimation of Trendlines on IN.

Screenshot from IN

But since the last post and estimation, Trendlines share price has been on a downtrend on a prolong period.

Screenshot from IN
I am not sure if the post or estimation have influenced anyone to purchase Trendlines. Nevertheless I still felt that I had to be responsible and thus, I will write out my current thoughts on Trendlines.

First of all, I will like you to know that I am still vested in Trendlines (about 2.5% of my portfolio).

Why am I still vested? If you had read my previous post on Trendlines, other than point 1*, all the other positive points are still relevant. Some of these points, as elaborated below, have become even more advantageous!

*CEOs did not continue to purchase Trendlines and the company also did not made any share buybacks.

1. Their dividend policies have become clearer with recent new on Stimatix. Stimatix will provide recurring income for Trendlines and in return dividend for the shareholders. Do note that Trendlines owns 28.2% of Stimatix and a payout ratio of 90% of dividend payments received from royalties.

2. Collaborators! Other than B Braun Melsungen AG, Trendlines also have many other extensive partnership collaborators!

Trendlines Investor's Powerpoint

3. Companies born out of Trendlines lab are not within its balance sheet yet! These companies will eventually bring in profit and will definitely boost its asset within the balance sheet. Thus, the balance sheet is actually still understated!

Trendlines Investor's Powerpoint

4. News, news and news! Recently, an IN friend have actually found some news on the Trendlines' portfolio companies that are not explicitly announced and here they are:

Regardless of the above positives, the RISKS that I stated in the previous post still exists too: (1) Overstating of the value of their portfolio company and (2) having failed portfolio companies being written off in future. This could produce losses that will definitely impact the share price negatively.

So what is the Fair Value?

Recently, many of you will have notice the changes in how I view a company recently. I will always try to look for a REASONABLE fair value. For Trendlines' share price, the management had compared against other industry comparables as per its investor's powerpoint slide.

Trendlines Investor's Powerpoint

But I felt the share price calculation should be based on dividend instead. This is because I felt dividend will eventually become the main catalyst for Trendlines over the next 2 years.

So the amount of dividend I calculated is....0.3 cents! This is only about 2.5% dividend yield based on the current share price.

This is based on the estimation of the following -

1. Dividend Payout of 90% of dividend distribution of about US$800k

2. Dividend Payout of 40% of an Exit Event where the net cash after tax distributable proceeds paid to Trendlines for the financial year is at least US$2 million.

Finally, one must also take note of the following taken from the recent annual report and announcements:

1. In August 2016, Medical received a dividend distribution from the Portfolio Company in the amount of approximately 897, the dividend distribution representing Medical’s share of a portion of the cash consideration received from the Licensee.

2. In addition to a dividend which was received subsequent to the initial closing in November 2014, Trendlines Incubators Israel Ltd., the Group’s wholly-owned subsidiary, has additionally been paid approximately US$1.6 million in dividends, to date, upon Stimatix’s completion of the relevant milestones.

3. On September 29, 2016, the Group sold its holdings in E.T.View (including options). The Group received consideration in the amount of 3,700, of which 2,100 is recorded in gain from disposal of investments accounted for under the equity method and 1,600 in gain from change in fair value of investments in Portfolio Companies.

4. In June 2017, the Group completed the sale of its holdings in Biosight LTD. The Group received consideration in the amount of 1,300 and recorded realized gain from change in fair value of investments in Portfolio Companies in the amount of $1,200.

5. On November 13, 2017, the Group completed the sale of its holding in MitrAssist Ltd (“MitrAssist) for a total consideration of approximately 1,150. The Group recorded realized gain from change in fair value of investments in Portfolio Companies in the amount of $1.1M as well as financial expenses in the amount of $0.5M with respect to repayment of the IIA loan relating to MitrAssist.

In Short

I understand that the current estimated dividend yield is quite low. Not even 3%. It could get even lower since the last few exits Trendlines had made is less than US$2 Million. Thus, these are more of the negatives that I believe investors should take note.

BUT I will still stay vested and may even buy more if the share price drop even MUCH MORE.

This is because I believe in the company's growth and it takes time for the revenue to grow. In the meantime, the dividend can "comfort your continuing patience".

I must also state that Trendlines has "not" yet given any dividend and their dividend policy must have well-thought through prior to announcing. Therefore, their current exits events could possibly be used to support their current operations, rather than for dividends. Nevertheless, Trendlines is not the usual business model and investors should not really used their current understanding to define this firm.

Investors will just have to wait for Trendlines to grow for at least 2 years before it become the multibagger we are waiting for.

Simple Investor SG and I will be having our next Coffee With Us on 17 April 2018.If you are interested in the event, do sign up via this LINK.We look forward to meeting you!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

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Target Price


Going to make a bold estimate in view of what I wrote.

The timeline will be long. But if everything turns out well, should hit that figure...

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Not sure why this post is not being crawled yet. But here you go... it is about time someone wrote about them.

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It Is About Time Someone Wrote About This Company...
- Original Post from T.U.B Investing


Being a blogger and yet an investor of this company, I met Reyna at the Invest Fair 2017. She is the Financial PR rep office of The Trendlines Group Ltd (aka Trendlines).

Even though she is not a direct rep of Trendlines, she was able to answer my questions very clearly. This was unlike the other companies there whose employees are unable to answer some of the simple question I posted.

She impressed me with her understanding of the company and I immediately went back and bought Trendlines' share – a small portion but this is a start.

Then 1 week later, she actually invited me to Trendlines' management briefing. I agreed straight away.

So guess what happens after the briefing?

I bought more of Trendlines after the briefing.

The reason is because despite having 2 CEOs, Todd Dollinger and Steve Rhodes, they seem to be able to complement each other very well. In addition, they were upfront, honest and were able to articulate their strategy very well to the audience that day.

Profile In Short (As per their website)

The Trendlines Group is an innovation commercialization company. Trendlines invents, discovers, invests in, and incubates innovation-based medical and agricultural technologies. As intensely hands-on investors, they are involved in all aspects of our portfolio companies from technology development to business building. They invest principally through their incubators: their two Israeli government-franchised incubators, Trendlines Medical and Trendlines Agtech, their Singapore incubator, Trendlines Medical Singapore, and their in-house innovation center, Trendlines Labs. Simply stated, they create and develop companies to improve the human condition.

How did it fare against Fundamental Scorecard?

No information via the Ultimate Scorecard due to the company being listed less than 5 years.

Then why did I still buy them?

*Didn’t you already said that you should stick to your Ultimate Scorecard strategy in the previous post!

1. CEOs have been buying

Both of the CEO have been buying the shares of Trendlines since the start of 2017.

2. Strategic Review and Dividend Policy

The CEOs decided to reduce their salaries as an example of expense reduction. I will say this is very very interesting and they set an example across the company.

Trendlines also propose a dividend policy. As much as I will say their dividend policy is a bit confusing, but it is better than having none! The shareholders have been asking the company to pay dividend since they were listed, and at last, their wishes were answered!

3. Consistent Updates of Their Portfolio Companies

Seriously, if you are really interested in their portfolio companies, then you should go and read their updates. Trendlines do update on a monthly basis on their “Most Valuable Portfolio Company” and “10 Companies to Watch”.

Once you read their updates, you will be amazed to know what their portfolio companies are making!

4. They have Almost “No Liabilities”.

In their 2nd Quarter, the company provided a FAQ.

In the FAQ, they explain that, “…Although reported as debt, about 99% of our long-term liabilities are non-recourse and, as such, are conditional debt– coming due and payable in cash only when certain value-building events occur. Our two largest items in this section, loans from the IIA and deferred taxes, only come due upon successfully exiting portfolio companies. If we write off or write down a portfolio company, the part of our long-term liabilities attributable to that portfolio company is also written off or written down.

There are three main long-term liability items:

1. Roughly $2 million of our long-term liabilities as at 31 December 2016 are the long-term portion of Deferred Revenues, which, as explained above, represent our commitment to provide two years of services to some portfolio companies in exchange for shares that we received.

2. Just over $4 million of our long-term liabilities as at 31 December 2016 are made up of Loans from the IIA. This debt is primarily comprised of non-recourse loans received from the IIA under an old funding program, and are presented at fair value. Each loan was granted in regard to a specific portfolio company and is only repayable if we exit from that specific portfolio company for which the loan was received. This method of funding by the IIA is no longer in effect and IIA funding is now given as a grant directly to the portfolio company and not through our balance sheet.

3. The largest part of our long-term liabilities is Deferred Taxes, which at 31 December 2016 was approximately $12.5 million. Deferred taxes derive mainly from the difference between the carrying value and tax basis of our portfolio companies and are recorded mainly when there is an increase in the carrying value of our investment in portfolio companies. These taxes only become due upon a taxable event, when we sell all or a portion of our holdings, such as in the event of an exit. When the value of a portfolio company increases or decreases, the corresponding deferred tax liability will increase or decrease accordingly. If we write off or write down a portfolio company, the deferred taxes attributable to that portfolio company, are also written off or written down.”

At the end of the day, many of the liabilities are repayable only when they exit an investment or sold off a portfolio company.

So if there is no exit, there will be no liabilities payable. Furthermore, it seems that their exits have been very profitable.

During the briefing, it was stated rather explicitly that, in the event Trendlines intend to exit/written off a portfolio company, it will be done at a very early stage so that not a lot of liabilities are recorded.

5. Strategic Partner

Trendlines also have a major strategic partner in B Braun Melsungen AG.

As per Wikipedia, “B. Braun Melsungen AG is a German medical and pharmaceutical device company, which has offices and facilities in more than 50 countries. Its headquarters are located in the small town of Melsungen, in central Germany. The company was founded in 1839 and is still owned by the Braun family.”

6. Trendlines Innovation Labs

Other than the portfolio company, Trendlines also have its own innovation labs. Any product that is created by the lab will not be able to be shown in the balance sheet as there is no value to it yet.

However, once it has signed up some contract or sold some royalties, they will the information recorded in the balance sheet.

This also meant that there could be hidden value in this company that has yet to be revealed.

7. Expansion into China

Trendlines have currently expanded into China. In my own opinion, China has been a very innovative country with the uprising of BAT. However, in my own opinion, for medical devices, they seem to be still lagging behind. I believe this will be the next catalyst for Trendlines in the next few years.

But what about the risk?

The main risk we should take note of is that the how the valuation of each portfolio company is calculated.

Although this was explicitly explained during the briefing and within the FAQ, but I still have my reservations. On the other hand, based on Trendlines's management experience, it seems like they were mostly able to make a significant gain on their exits.

Another concern I have is if any of the portfolio company that were write off were explicitly stated.

In Short

My conclusion on Trendlines is that it is hard to measure the company quantitatively due to its hidden value. But qualitative-wise, the company does have many positive points and it seems to be expanding in an exponential way.

Finally it is important to note that their product are eventually biomedical/bioagri products, which will definitely have a use if it is produced and market in the right way.

And... I bought more of this counter today!

Current Price: $0.165 as of 8 Nov 2017.

Please do your own due diligence before you invest in this stock.

Do note the author is vested in this counter/company at an average price of $0.153.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! Do sign up to get the latest scorecard of the SGX counters now!

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