I couldn’t find a discussion thread for this company, and I started wondering why. It’s a true small cap, whose current or future business model (platform as a service, PaaS) I see huge potential in, just as @Mikael_Rautanen and Mikael’s “angels” occasionally remind us of the excellence of SaaS companies.
The IPO timing was almost the worst possible, and the past year hasn’t brought significant good news in the implementation of the new business model. The stock’s valuation has consequently fallen below 2.5 euros at the time of writing.
The reasons why I wanted to open a discussion about the company are twofold. Firstly, the company and its business model are associated with many positive drivers, such as digitalization, sustainable development and efficient use of natural resources in climate change, big data, AI, machine learning, etc. One who has only superficially familiarized themselves with the matter can only try to guess what kind of opportunities and value creation the business model offers to other companies. Secondly, there is unfortunately very little information available about such real small-cap companies, apart from semi-annual financial statements and interim reports, and stock exchange releases. For small investors to have enough information available to support investment decisions, it is good to network, and the Inderes forum has proven to be an excellent way to share and get information.
The question is, how do you, my fellow investors, see this company? Does it have the tailwind of megatrends behind it, or is it just another sleepy stock that has gone public, whose inevitable fate is to crash into a penny stock?
Hello. My view is skeptical based on a couple of points. First, software. The company has a long history in hardware and RFID technology, not SaaS or PaaS software. In connection with the IPO, a change in the earnings logic from hardware sales to a platform was mentioned. Developing, producing, and especially selling cloud and platform-based services on a global scale requires completely different expertise than hardware manufacturing, not to mention utilizing AI. Providing 24/7 support services for B2B environments is expensive in Finland, etc. There are many software companies on the market that have long been delivering and selling more advanced, ready-made solutions. However, we are talking about things that hungry startups invest 100% in and also receive significant funding for when the curve is a hockey stick and the service has a large number of customers. Can a nearly startup-like pivot be made here in such a way that the cash flow remains stable and the revenue stream is maintained?
Software supports hardware, but my second skeptical point is that the application possibilities of RFID are limited. Self-service checkouts, where the contents of a shopping bag are automatically read, have been in the public eye. For this to work, products would need to be “tagged” with RFID labels already at the factory. This seems to be a long way off. In addition, the unit prices of RFID tags are so high that they are unlikely to be seen in food stores, at least. Products containing liquids and metal are challenging and require more expensive tags per unit price for identification to succeed at all. All of this limits the use cases.
The past year seems to have been difficult, and since hardware sales have fallen short of targets according to reports, this will also affect this PaaS package.
It’s great that the company sparks discussion and that we get well-founded arguments. Without going into the technological aspect too much, I see the challenges coming more from within the company than from outside. The biggest challenge, of course, is the PaaS (Platform as a Service) business model and acquiring the necessary arrangements, expertise, coders, and other technology it demands. Whether RFID technology is the best possible “tool” in all business sectors is another question.
However, the company has managed to transform and survive throughout its long history, so I am positive about their attempt to seek growth opportunities and recognition through their listing.
It should also be mentioned that I own a small position in the company. What happens to the company and that small position over time remains to be seen. These companies do offer the possibility of higher returns, although the risk of losing some or all of the invested capital also exists.
That Stora thing is bullish for Nordic ID, because it increases the use of RFID in packaging. Stora also doesn’t make readers themselves, but cooperates with reader manufacturers. Nordic ID’s readers, in turn, work with all RFID tags, including Stora’s. Hopefully, that Stora thing gains momentum, because it would benefit the entire RFID ecosystem.
It will be interesting to see how things turn out in the future, but it was positive to note that they immediately addressed the too rapid growth in cost structure (a lot of new staff hired in the last year, which led to a loss, as new Android-based products had not yet brought revenue growth).
Yes, adding RFID and other smart tags to packaging seems natural for a packaging material manufacturer like Enso. I don’t know and haven’t looked into how Enso handles the readers, but it seems to offer them as a service. Quite an interesting system, and it seems natural for such a mass manufacturer to be able to produce these tags in large quantities relatively cheaply.
For sure in the future, these tags will significantly increase everywhere. Many things immediately come to mind, for example, instruction manuals and other papers inside product packaging. If I understand correctly, an NFC tag is a tag readable with a phone.
It’s great to see how the discussion on this is developing. Hopefully this thread won’t get buried for a while yet. There didn’t seem to be many large investors among the biggest owners (excluding Veritas), so institutions aren’t interested in this yet, at least. It’s also interesting to see how the management uses the opportunity to subscribe for shares at a so-called inflated price. In the IPO presentation, it was noteworthy that, for example, not everyone on the board owned a single coupon. Has that situation been rectified yet?
I wouldn’t consider it completely impossible or out of the question for a larger company to buy this one. Especially if the company can demonstrate that its technology or something else is worth acquiring.
According to that, they don’t make their own, but of course they can probably sell, for example, Nordic ID’s readers with their own logos, in which case Nordic is an OEM supplier. On the other hand, we don’t know if they also cooperate regarding the platform (this could be information under NDA, who participates as subcontractors in the development of that ecosystem).
Atos makes products that are a little different from Nordic ID:
“To buy a product from the intelligent cabinets, the consumer only needs a compatible payment app or payment card. When the cabinet door is closed, the consumer is charged via the app for the items taken out. Apart from this service, a back-end solution is offered to retailers for keeping track of transactions or replenishment.”
Stora is constantly looking for new players for that ecosystem.
