I sold out of PTE.v in May 2017 because I hadn't done my DD properly. There were several million warrants outstanding that expire in 9/17 that had a very low .25 exercise price that caused a big drop in price from C$1.50 in March to slightly below C$1 recently.
Today I bought back into PTE.v. I think we are close enough to the expiration of the warrants and I think most have been exercised and those wanting to sell have done so. Another source of selling might have been the investors who participated in the recent ~C$6million dollar financing this spring. They bought shares at C$1.10 and 1/2 warrant with a C$1.80 strike price for 24 months. Some investors may have sold their shares and kept the warrants, expecting sufficient price increases in the next two years to profit from the warrants while getting back their initial investment.
Pioneering Technology produces temperature limiting products for cooktops and ranges. Right now they sell to commercial developers of senior living facilities, hotels with kitchens and institutions like college dormitories.
Sales increases have been impressive with ytd growth of 80+% over 2016.
PTE.v is profitable but selling at a relatively steep p/e of 25.
I think PTE.v is still cheap because of the huge opportunity that lies before them. Recent regulation will require ALL ranges sold after 4/19 to have temperature limiting capabilities. PTE is the first and currently the ONLY way to comply with these regulations.
Cooking fires are estimated to be responsible for 5 million fires in the US each year. Up to 1/2 of all reported fires.
I think this little Canadian company is at the beginning of their growth curve. In addition to US growth, they should benefit from their recent deal with the top European company in temperature limiting products.
This deal will allow PTE to sell products for smooth top ceramic cooktops in the US and their European partner to sell PTE products in Europe.
There are some possible negatives. With the deadline looming, US manufacturers of ranges COULD buy truckloads of PTE products to satisfy their new range sales needs. BUT they could demand a big discount for their volume purchases. OR they could build around PTE patents and develop their own ways to comply with the regulations.
No matter what, I expect gross margins to drop when PTE penetrates this large market opportunity. PTE has very high gross margins close to 60%. I can't imagine large appliance companies paying that high a price for burners. Another option might be a buyout. Considering their patents, one large player may decide to buyout PTE and make their competitors buy their products.
I think PTE.v is a unique opportunity that could be very profitable for mid term investors.
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