Updates: Sanuwave and Pioneer
Underwriting the book to date
Happy Tuesday all!
Here are a few updates on some recent names:
Sanuwave Health (SNWV: NASDAQ)
Since publishing the idea, SNWV traded as high as $35.58, yet most recently sold off to as low as $24.90, closing yesterday at $26.24 as at the 2nd of June 2025.
I believe a lot of the recent stock price volatility is down to the ‘weaker hands’ of former warrant and convertible note holders who only recently converted their investments to common stock in October ‘24. For a lot of them, this conversion was likely viewed as ‘found money,’ so to speak. As such, they are probably outsized contributors to the recent selling. However, with a tight register of only 8.5m shares and a free float that is considerably smaller, I believe the nature of the register is set up nicely to enable a decent long-term run as the company continues to execute into FY25 and ‘26 and all the weak hands move on in the much nearer term.
To recap the crux of my thesis: Sanuwave started 2024 with 2 sales personnel and ended the year with 9. They expect to grow this to a team of 12-13 in 2025 which will enable the company to have full nationwide sales coverage for the first time. This team is also now incrementally more senior and experienced than in prior years. Despite the undercooked sales force throughout the bulk of 2024, the company still grew revenues 50% YoY (for the second year in a row), whilst also delivering 73% incremental EBITDA margins. On top of this, UltraMIST is about to achieve just 1% U.S. wound care market penetration. In other words, the bottom-line earnings growth runway is incredibly long and far-reaching, and I don’t believe we are trading anywhere near the right price given this extant runway and the operating leverage that will continue to drive earnings power rapidly from here.
At today’s levels, Sanuwave trades at just 10.5x my conservative estimate of FY26 EV/EBIT (which only assumes the same absolute $ revenue growth achieved in 2024, despite the massively bolstered sales team today). Given ~50% incremental EBIT margins moving forward, I believe Sanuwave should and will command a premium market multiple of at least 20x FY26 EBIT, a multiple which adequately reflects its premium growth profile and embedded operating leverage. I suspect this is a “show me story” and believe continued execution into FY25 will wake the market up to the company’s profound organic growth prospects. As such, I added to my position yesterday.
For those that missed my initial write up on Sanuwave, you can access it here: https://www.tenvacapital.com/p/sanuwave-health-snwvnasdaq
Pioneer Credit (PNC:ASX)
Pioneer is up ~29% since my published write-up. Despite this, I feel the market has yet to wake up to the sustained multi-year earnings growth runway PNC are about to enjoy and as such believe we have a long way to go before we approach fair value. The market seems to be asleep at the wheel when it comes to digesting the transformation of Pioneer. I believe this is primarily due to the phenomenon of it being too small for most institutional players to touch, yet too complicated for most retail investors to understand. Hence, it has fallen in the gaps and trades today much like an orphaned equity. In underwriting Financials Companies like this, cash flows are everything. As such, the achievement of Net IRRs in excess of 15% on the cash collections of all yearly PDP vintages since inception gives me great confidence in managements’ underwriting skills. This, combined with the step-change in the industry landscape that Pioneer are in the throws of taking advantage of, should also result in turbo-charged bottom line earnings growth which I believe will serve as a catalyst for a much larger re-rating.
I recently attended a Webinar with Bravure Group – Australia’s leading advisors to the nation’s largest blue-chip financial institutions on debt collections, recovery and insolvency. The presentation was extremely insightful, and I look forward to sharing my key takeaways with you all in another note in the coming weeks. The picture painted by Bravure on the industry recovery and structure was incredibly encouraging. A particular stand out for me was their emphasis on how difficult it is for an incumbent to get on the purchasing panel of Australia’s big 4 banks and subsequently how entrenched the big 2 PDP players in this space - Pioneer and Credit Corp – truly are.
Access to my initial Pioneer Credit write-up can be found here: https://www.tenvacapital.com/p/diamond-in-the-rough
Lastly, I am working on a new idea and hopefully should get this out to you all within the next 1-2 weeks.
Hope you all have a great week!
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