Research note


XMReality: Directed share issue and new major shareholder

XMReality announced that the company conducts a directed share issue that will bring SEK 21m before excluding transaction costs. Furthermore, the company announced that Investment AB Spiltan has acquired ALMI Invest’s shares and has thereby become the company’s largest shareholder.

As mentioned in our latest update, we highlighted that there was a risk that the company would have to raise additional capital given the level of cash held by the end of Q2 (SEK 30m). Today’s news entails that the company performs a directed share issue bringing SEK 21m before excluding transaction costs. 2.44 million shares will be issued at a price of SEK 8.75 per share, corresponding to a 3% discount compared to the 10-day volume weighted average price. The total number of outstanding shares will thereby amount to 17m after the issue, implying a dilution of about 14%.

XMReality mentions that Handelsbanken Fonder, a Swedish pension company’s small-cap fund and LMK-stiftelsen, as well as a number of other investors, has subscribed for shares in the issue. We find it reasonable to speculate that AMF, which was the company’s second-largest shareholder per 2018-06-30, could be the pension company that is being referred to.

Apart from the share issue, the press release also reveals that Investment AB Spiltan has acquired ALMI Invest's shares (held about 6.9% of the outstanding shares) in a block trade at SEK 8.75 per share. Spiltan has thereby become the company’s largest owner, holding about 14% of the shares. We find the news positive given Spiltan’s good reputation and long-term investment strategy. As pointed out in our previous updates, the responsible investment manager at Spiltan is Björn Persson, who previously was a director of the board in XMReality.

We regard the company’s recent developments to be very positive. Since the beginning of the summer, the company has announced the following news:

  • First general agreement signed (Coesia)
  • Haas group places order and initiates roll-out
  • Undisclosed US defense company increases their software usage
  • New hardware partner (Vuzix)
  • Two strategic partnerships (Semcon and Novacura)
  • Additional software improvements (support for IoT integration and the new web client especially important features)

Thus, the company seems to have strong momentum, and it is positive that the company now has secured the funding needed to seize the opportunities. Our interpretation is that the company will focus on strengthening its sales organization with the intention to increase the Remote Guidance usage among both new and existing customers. We further find it positive that Spiltan acquired all of ALMI’s shares and thereby reduced the risk of future selling pressure on the share.

We have updated our model with the increased number of shares and cash addition, leaving our fair value range unchanged. Our fair value in base case remains at SEK 13 per share. We are now awaiting the company to announce additional, and larger, roll-outs, showing that industrials truly are ready to adopt the solution on a larger scale while also illustrating the great potential in its existing customer base.

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