Comment on EPTI’s Q1 report

EPTI has published their interim report for the first quarter of 2023. The following are some points that we chose to highlight in connection with the report:

  • Becomes a pure-play investment company and sees great opportunities within AI
  • Divests other parts of the business
  • The Net Asset Value (NAV) at the end of March 2023 amounted to SEK 328 million – the share trades at a discount of 91%

Earlier this spring, EPTI announced that they had adopted a new strategy to become a pure-play investment company with a focus on artificial intelligence (AI). The new orientation aims to consolidate EPTI’s position as an industry-leading player within AI and that this will enable an increasing and sustainable growth, as well as higher profitability. Furthermore, the new business orientations is expected to reduce costs corresponding to approximately SEK 14 million on an annual basis in the parent company, which creates a better cash flow and increased opportunities for further investments.

Regarding the AI ​​track, during Q1-23 EPTI launched the portfolio company Oodash, which can be described as a ChatGPT for company data, where the AI-based service makes it possible for company managers to ”talk to their company”. In total, EPTI’s portfolio consists of 16 technology-oriented companies that use AI technology to varying degrees.

As a result of the new strategy, EPTI intends to divest the Service business and other assets that lack a clear connection to the new orientation. This is expected to strengthen the cash position and can thus contribute to EPTI being able to accelerate the operations even further. Regarding EPTI’s incubation segment – Idea Lab – this remains, which aims to turn ideas into reality where EPTI promotes and facilitates start-up companies’ path towards growth and profitability. Oodash, InBanner and Apotekamo are some examples of companies that are a result of Idea Lab. Regarding Apotekamo, the company has an ongoing rights issue where Apotekamo is valued at approximately SEK 215 million (pre money), which based on EPTI’s ownership share of 41.5% corresponds to a value of SEK 89 million. Thus, this holding alone exceeds EPTI’s entire market capitalization by a factor of 2.9x, which clearly highlights the upside potential in EPTI’s share from current levels.

All in all, we are positive towards EPTI’s transformation of the business into an investment company with a clear AI focus. At the end of March 2023, EPTI had financial assets with a book value of SEK 133 million, with a Net Asset Value (NAV) of approximately SEK 328 million. In relation to the current company valuation (Market Cap) of approximately SEK 30 million, this means that EPTI’s share is trading at a discount of 91%.