Physitrack PLC (PTRK): Severely Mispriced Opportunity in an Overlooked Nordic Microcap

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Investment thesis summary for PTRK

Lind is long Physitrack Group (PTRK) as a long-term core position in our portfolio, meaning we will actively engage with the company on shareholder value unlocking initiatives. We believe the share of PTRK is severely mispriced, where the market is hung up on history rather than the future.

Neglected, misunderstood, and forgotten

• Due to a historical lack of performance and microcaps falling out of favor, no one is paying attention to the underlying improvements of the business, resulting in mispricing of the stock.

Lifecare quality is not showing in the valuation, & Wellness is now back on track with the correct focus

• The segment Lifecare is a great SaaS business with moats. We find that future growth and margin acceleration are not priced in. The valuation of Lifecare alone should be more than the current market value of the entire Group.

• Wellness segments, enhanced software focus, and the cost reduction program create an increasingly bright outlook.

Software inflection around the corner

• Software revenue is rapidly expanding and will, in some years, be the only type of revenue, leading to margin expansion and increased stability. We also believe a stronger cash flow focus and new Wellness deals can be a positive catalyst on the upside.

Further value-enhancing initiatives we suggest are:

• Move from an EBITDA focus to a cash flow measurement in internal and external communications.

• Improve shareholder communication and segment reporting to highlight business unit performance.

• Even more strict cost programs for Wellness & reduce HQ costs as the need for M&A staffing is no more.

• Potential strategic sale or spin-off of the Wellness business to unlock further shareholder value.

• Look for a solution on the “wet blanket” among the shareholders.

SOTP Valuation shows a significant margin of safety at current share price levels

• Our Sum-of-the-Parts (SOTP) valuation far exceeds the current market price. At these price levels, we expect the share to generate an IRR of over 30% in the coming years, presenting an attractive opportunity with modest downside risk.

• Optimized value showcases an extreme upside, that can be reached if the correct strategic initiatives fall through.

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