CBR - Carbon Revolution

[peter2]

We all get stuck in unfavourable situations when dealing with the markets. My latest is CBR and I was caught by the heavily discounted cap raise that thumped the share price. OK fine it happens how do I deal with it. The SPP price was 1.60 and I thought that this would provide a solid support level and held. That idea was correct and price held the 1.60 level and started to rally once the cap raise was completed. Things were looking up. Phew. Until . . . bad news.

The world wide shortage of semiconductor chips has forced some car manufacturers to pause production. A pause of this major activity has ramifications to all manufacturers of car parts, including wheels.

One car manufacturer has cancelled it's order with CBR for 1800 wheels. It may not seem to be many, but it's the canary in the coal mine, an early warning of further cuts.

I have no doubt that we will see many more instances of disruptions caused by the Gov't responses to the Covid pandemic.

Just as the economies are starting to open up, it's easy to be optimistic that the worst has past. I expect to see more disappointments in the months ahead.

eg. Lack of migration due to border closures is starting to cause labour shortages in many industries.

CBR has got the money from the cap raise to build it's new assembly line. I expect this will take some time (year?). While CBR is building this new line, how is the share price going to hold up? If there's further sales cuts? How does a long term investor hang on while the share prices are falling? How low can prices fall before they represent value to an investor when future sales and especially the timing of these sales orders are unknowable?

I'll be monitoring CBR for a reversal setup but it may take a long time.

 

[So_Cynical]

We all get stuck in unfavourable situations when dealing with the markets. My latest is CBR and I was caught by the heavily discounted cap raise that thumped the share price. OK fine it happens how do I deal with it. The SPP price was 1.60 and I thought that this would provide a solid support level and held. That idea was correct and price held the 1.60 level and started to rally once the cap raise was completed. Things were looking up. Phew. Until . . . bad news.

I tried to capitalise on the SSP weakness thus had a low ball buy order at 1.52 ~ up the creek now, as always time will tell. The turn around may take years.

 

[aus_trader]

Sell offs can be brutal especially when they come with huge gap downs. My latest bungle is with CGC price crash, which could not be predicted in any way, and I think the results were OK so I don't really get such brutal market punishment on the stock

 

[peter2]

Re-started a spec position in CBR. I noticed that there's many more bids than asks in the MD. My initial target is 1.60 - 1.70 zone where price traded during the recent SPP (@1.60).

 

[peter2]

I'm having another go at CBR with this reversal opp. Spec position started today after reading through latest report.

CBR has started production of two product lines for Ferrari. Company reports losses for the year as costs remain high. Covid restrictions are limiting business opportunities. Installation of M1 production line is on track but they do need to create more sales.

 

[peter2]

Having another go at CBR. Bought a little late after seeing some early bullish signs of a reversal. I've marked my T1 and T2 target levels but when you look at them on the weekly chart you see that there's potential for price to go a lot higher. The prior SPP was at 1.60. If price gets back there that should remove some supply. If it fills the gap above 2.00, that ensures a good result.

 

[So_Cynical]

Up 19% today on the release of a very upbeat quarterly, wheel sales up 109% and GM signed up as a new customer, quarterly revenue up 82% all this after a tough couple of years and an all time low share price, still a long way to go.

AFR write up

Electric car demand drives Australian wheel company to new highs

Carbon Revolution said it had more than doubled sales in the first quarter of the 2022 financial year, while quarterly revenues jumped 82.6 per cent

www.afr.com

 

[peter2]

I was attracted to narrative for CBR. What's not to like about lightweight carbon fibre wheels!

However growing the business has been a struggle during the Covid pandemic. CBR are building new wheel processing lines and have attracted manufacturing contracts for many high end car companies. The latest is Ford, who announced that CBR carbon fibre wheels are an option for it's 2024 Mustang "Dark Horse".

Meanwhile the price continues lower. $4 to 0.20 is some fall. No signs of a reversal yet.

 

[So_Cynical]

20c is like end of the world level, the market over doing it again.

 

[frugal.rock]

Being a car buff (ICE only) I have always liked this company, but...never held.

They might need to reinvent the wheel? ?
Support is building, but isn't clearly "in" yet.
At these levels, it's a cheap takeover?...?

 

[qldfrog]

Being a car buff (ICE only) I have always liked this company, but...never held.

They might need to reinvent the wheel? ?
Support is building, but isn't clearly "in" yet.
At these levels, it's a cheap takeover?...?

I like Australian and leading edge tech, but wonder if they are not losing the edge.seems they are still a bit ahead but now they are labelled one of the few carbon rim makers vs 2017 when the were alone.
I quickly got this too:

Not exactly the same as spoke are carbon and rim may remain aluminium..but basically look and weight is similar and cost 60 times lower at least..
I am afraid they are niched to limited ultra luxury car market .
Hum...not for my investor portfolio

 

[frugal.rock]

Good to see (for holders) it's found that support level.
Nice.

 

[So_Cynical]

Picked in the monthly comp - SP has found support all be it at a very low level, sales are building, revenue is stead and cash burn trending down.

 

[frugal.rock]

Picked in the monthly comp - SP has found support all be it at a very low level, sales are building, revenue is stead and cash burn trending down.

Mate, timing is everything for the comp.
Not sure if you have that right... ??

Hopefully though, you are holding?
(or sold out shortly after open...)
The wheels are really turning today. Smokin' it up!

 

[lenesha]

So now it is in Suspension from Quotation, could someone explain why this is happening? Sorry I'm quite new to the share market, thanks!

 

[greggles]

So now it is in Suspension from Quotation, could someone explain why this is happening? Sorry I'm quite new to the share market, thanks!

This is what the announcement says:

At the request of ASX, Carbon Revolution Limited (ASX:CBR) (Carbon Revolution) requests that its securities be placed in voluntary suspension immediately pursuant to ASX Listing Rule 17.2.

The voluntary suspension is requested pending the release of a supplementary announcement by Carbon Revolution in response to ASX queries in connection with the ‘Quarterly Activities/Appendix 4C Cash Flow Report’ released on the ASX market announcements platform on 31 October 2022 (Supplementary Announcement). Capitalised terms not otherwise defined in this request have the meaning given to them in the Appendix 4C.

In accordance with ASX listing rule 17.2, Carbon Revolution provides the following information:

• Carbon Revolution is seeking a voluntary suspension for the reasons noted above;
• Any Supplementary Announcement requires approval of ASX and as such Carbon Revolution is currently unsure when it will be in a position to lodge the Supplementary Announcement, however it may not be until Carbon Revolution has signed the binding agreements in relation to the Proposed Transaction which is expected to be by late November 2022;
• Carbon Revolution requests that the suspension last until it lodges the Supplementary Announcement;
• Carbon Revolution is not aware of any reason why its securities should not be suspended; and
• Carbon Revolution is not aware of any further information which is necessary to inform the market about the suspension.

Sounds complicated. Looks like there is something going on in relation to a proposed transaction that requires ASX approval. It seems as though they may be suspended from trading for most of this month. Not sure if this is good or bad for the company.

 

[peter2]

CBR's proposed transaction is a binding bid to merge into a Nasdaq SPAC. This would see CBR leaving the ASX. Not yet a done deal though. CBR may also need more bridging capitol before any merge. Looks messy and looks like another promising Aussie tech company going overseas.

US capital is taking advantage of the slump in tech company valuations and the lower AUD to bag a few bargains.

 

[peter2]

Interesting.

 

[Ferret]

Came out of its trading halt and dropped to an all time low. Market obviously doesn't think the merger will complete.

It all looks very complicated to me. One to watch from the sidelines.

 

[So_Cynical]

Another factor is that most/some people dont want to hold a non ASX stock, im ok with a Nasdaq listing.