Tze-wei Chong 🇦🇺🧢

CONTROVERSIAL OPINION: 1) You can fuel your car for 5 years at $4/Litre for the cost of a cheap EV 2) EV inventories across the country have sold out this week. 3) Our power grid has ZERO CHANCE of keeping the vehicles charged and the lights on. This is a forced transition

$4DX.AX I casted my eye over this company today. It seems to have gone exceptionally well in recent times. But there are a couple of oddities: 1. The main reason you get investigated for lung function is in an emergency when you come into ED breathless, and the two things you worry about is you've had a heart attack, or you've had a pulmonary embolus. To detect a pulmonary embolus the best imaging is a CTPA, that is, a CT pulmonary angiogram which requires contrast. The software provided by 4DX has not convincingly shown that it can substitute for this standard, recollecting that their algorithm is used on a non-contrast scan. If I had a suspected PE I would go with a standard test. Give me the contrast. 2. Having said that the ventilation part of the test is much better established, which might be useful for a subgroup such as people who have emphysema or other diseases, but this is a much smaller group than their claim addressable market. So at least you don't have to suck on radioactive gas as part of a standard VQ test, which is not a CT scan, but a very different test. Those VQ tests have always been pretty crap anyway due to poor resolution. 3. The board seems to be made up of American MDs, in Australia we have MBBS although a couple of schools now give you a choice of which one you would prefer, and you can even apply retrospectively to get an MD. I'm not sure why an Australian technology company seems to think having a board of American MDs is going to improve their management or market penetration. Maybe it is due to the American market being larger... 4. A lot has been said about the 10 million invested by ProMedicus. Those PME guys are the smartest puppies on the street, and I say that without being an investor because it's always been too expensive for me, but they have structured that deal so that it is convertible debt, in other words if 4DX goes horribly they can still stand in line as creditors and collect some pennies from the ashes, but if it goes well they can convert to equity. The company claims it's non-dilutive within a range which is very disingenuous...the sort of thing a PE owner would say... I would prefer they just call it what it is which is asymmetric optionality in the favour of PME. Having said all of that the fact that ProMedicus invested at all says that they see some future, and it is an investment within the PME circle of competence. So maybe they should be our guide... Except we can't buy a convertible hybrid, we can only buy equity. 5. Even so, I'm not convinced this is going to be a life-changing technology, not like say radio ligands or the organising principles behind Pro Medicus. That doesn't mean it won't go well, it might go amazingly, but I'm a little cautious. I think they overestimate their market, I think their market Will be very small as a fraction of total scans. 6. Basically, I just haven't seen the arguement as to why I should pay for the test. If I'm sitting here short of breath, whether it be from a PE or from emphysema, I'm still wondering why I should get the bin contrast test. If my kidney is good I'm going to have the contrast, and damn the risk of contrast allergy, which is really low anyway, because I need an answer because I'm sick. 7. They are not profitable, revenue of 5 million with 90% margin or some such thing. Does that really justify an $850m capitalisation? So yeah, not rushing to invest. But, when I write all of these things I want people to knock down the arguments because I might be wrong. I am always happy to be wrong like Charlie Munger. I don't want to miss the amazing...

Try Tesla self-driving!