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

$Trendlines(42T.SI)

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!

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

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

$Trendlines(42T.SI)

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
$0.5
(+204.88%)
NOW:

$Trendlines(42T.SI)

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.
$Trendlines(42T.SI)

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Just sharing some of the small/mid-cap stocks you may never hear before and traded before that is in my portfolio... Maybe can be a thread for others to share their small and mid caps in their portfolio too.

An update to the Small/Mid Cap (Excluding REITs):

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$Captii(AWV)
$Japan Foods(5OI) - Addition
$Trendlines(42T.SI) - Invested since Aug 2017 but forget to add
$Colex(567.SI) - Most recent additional
$Ellipsiz(BIX.SI) - Repurchase in 2018
$CWX Global(594.SI) - Added small amount.
$TSH(574.SI) - Forget to add this too!
$SingHaiyi(5H0.SI) - Itchy fingers adding!
$Sysma(5UO.SI) - Cash counter!
$TheHourGlass(AGS.SI) - Added.

Fully Sold:
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$SingHoldings(5IC)
$Sin Ghee Huat(B7K)
$BBR(KJ5) - Just sold all on 17 May 17.
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$SamuderaShipping(S56) - Sold
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$Secura(43B.SI) - Sold all
$Ocean Sky Intl(O05.SI) - Sold all at great gains!
$Yongnam(AXB.SI) - Sold off already.
$Ellipsiz(BIX.SI) - Sold off all already.
$Tiong Seng(BFI) - Sold all
$Hock Lian Seng(J2T) - Sold all as well
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$Teckwah(561.SI) - sold.
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