Intellego (INT) — Fraud narrative vs. 100-bagger potential

Dissecting the short theses, receivables, guidance, and real-world traction.

Since I covered Intellego, it has gone up more than six-fold and has transformed from a little-known Swedish company into a battleground stock discussed by many but known by few. The purpose of this article is to address what is actually happening with Intellego: is this really a company that can grow 50% over the coming years while trading below 10 times this year’s EBIT? Or are we actually looking at one of the most scandalous, fraudulent stock-pumping schemes in Sweden’s history?

For those who do not yet know Intellego, I recommend reading my earlier coverage on the name.

+40 % growth at 7× EBIT: a Swedish growth gem with a 90 % gross margin

Now it’s time to start uncovering the truth. For this article, we have used lots of sources, including direct interviews with industry experts and clients of the company.

Introduction

Over the last few days we have seen lots of nonsense claims regarding Intellego, so I thought it was time to get my hands on those claims and address all of them one by one. I hold a good position in Intellego and have covered it and have been bullish since 25 SEK, so I am biased; however, I think that I am more than capable of showing you data and reasoning to prove that most of these claims are nonsense. We will be completely transparent and also assess the real problems the business might face.

First of all, we are going to acknowledge the different bear claims across the five main areas these claims target: manufacturing, product, accounting, partnerships, and management.

Over the past 3 years, bears have recycled the same arguments over and over again. 3 years ago they might have had a point, but now the company has improved a lot, and we would make a huge mistake by extrapolating those past problems to today.

Manufacturing related short claims

One of the biggest bear claims regarding manufacturing is that it basically does not exist; they are a phantom entity that does not really manufacture anything. This is supported by the fact that Stema (which prints their dosimeters) and Bio-Hospital (which I think produces the ink) are not really showing a lot of revenue growth, even though we should see a lot as Intellego is growing a lot. Both companies have declining or stagnating growth according to published figures, so this presents a compelling short article, as clearly Intellego is faking their production.

This is pretty easy to debunk. The simplest way to view it is that in 2024 Big Four auditor Deloitte went over Intellego’s accounts in detail, and the audited numbers reflect that income and costs are completely real. And if that were not enough, it’s clear that clients are receiving their dosimeters; otherwise, we would already have seen huge complaints that the bears would be using.

If you are still not convinced that the manufacturing is real, just with some basic logic, I can refer you to when Montega visited the place where dosimeters are printed in Stockholm. Here is the LinkedIn post.

https://www.linkedin.com/posts/montega-ag_investorrelations-ir-aktien-activity-7344374953913270272-aBV5

Another photo from their LinkedIn showing the manufacturing facility:

They might have changed their ink manufacturer from 2021, or they might even do some of the mix themselves, but that is an incredibly minimal part of the costs. As you have seen, there are plenty of arguments that completely dismiss this claim, apart from the complete nonsense of having no production while clients are still getting their product.

Shorts somehow missed the point that Intellego’s dosimeters have gross profit of upwards of 95%, which makes sense for an IP comprised of ink and printing. COGS are minuscule and spread over several parties, certainly for total revenues of less than 30 million USD for full-year 2024.

The real risks:
Here I do not think there is a real risk. Manufacturing for such a product is not complicated—ink and a printer, basically.

Product related short claims:

Moving on to the product short claims, these are pretty straightforward to address. First of all, yes, YUVIO and Dolphin seem to be the same company; if not, it might be a company holding some IP or the one that does R&D that was left out of the acquisition. As they point out, the CEO of YUVIO is the only employee at Dolphin. It wouldn’t be uncommon to have a structure like that; Sofwave also had something similar. While shorts claim that YUVIO’s CEO was working at both, looking at Montega’s initiation report on Intellego we can see the following note under one of the photos: “Source: YUVIO, Dolphin Care.”

YUVIO, throughout its development, experimented with several different UVC capital equipment manufacturers—some were US companies, some Chinese—as expected from a small activity developing into a full-fledged subsidiary. Instead of conducting sufficiently deep research on the full scope of YUVIO’s product procurement over its history, shorts’ research consisted of browsing LinkedIn and drawing conclusions.

The other major claim is that there is basically no market for UVC disinfection devices, and that management has not provided any news regarding the development of YUVIO.

https://www.linkedin.com/posts/david-chen-0527b7163_congratulations-global-team-well-done-activity-7305134533656383489-jqTY/

This has been on LinkedIn for 6 months, so not a lot more to add.

The third most usual claim is that demand for this type of product is weak and that they will not have margins. First of all, the intent of the company is not to sell these at a profit; rather, to use them as a way to improve their selling proposition, creating a sort of razor-and-blade model. Take into consideration that most sales now will come from Likang and HENKEL, plus other new clients that will purchase the dosimeters directly—so no need for YUVIO. This is only required to improve the company’s direct selling proposition without a distribution partner.

Real risks:

Here it is true that I identified what could be a hidden risk. Recently, the US has pushed toward increased regulation of UVC devices. This has created a huge tailwind for the dosimeters, as they now require the use of dosimeters to check that disinfection is being done correctly. However, the regulation also led to needing FDA clearance for UVC devices. I am not sure if YUVIO has it; as it is being distributed, they work with an authorized vendor, as the Montega initiation report indicates, so this might be enough.

After doing deeper research I concluded that this is not a risk, since YUVIO has been working with all sorts of equipment. When regulation comes, YUVIO will use approved equipment from a qualified producer.

Additionally, regulation is something Intellego has been supporting and working toward, as any UV regulation will have to deal with validation. Demanding validation means requiring UV capital equipment users to use dosimeters, thereby creating a massive secular tailwind for Intellego for many years. Case in point: China just released a draft for UV regulation addressing, inter alia, guidelines regarding the use of Card Dosimeters. This is one of the reasons for the expansion of the Asian side of the business, as all value-chain participants are scrambling to conform to the coming standard. There is no reason not to expect a similar trend to take place all around the world. Thus the risk here is mainly to the upside.

Accounting related short claims:

Now we arrive at probably the most discussed claims—accounting-related claims. I will try to be as rigorous as possible and cover all the aspects. Some of these claims are related to the following points regarding management/corporate governance and partnerships.

One of the main bear claims, and probably the most important one, is that the books are probably cooked—that management is intentionally deceiving investors to pump the stock price with borderline illegal practices, leading to aggressive revenue recognition and understatement of costs.

These claims are supported by the delayed disclosure of the Daro Group when control was taken over on June 1, 2022, but not informed until August 2022. The income statement was consolidated instantly, but the balance sheet was not consolidated until Q4 2022. Some bears also see an impairment risk in the 82.9 million SEK of goodwill that the company has, a big part of it coming from the Daro acquisition, which they claim is worthless. They also point out that the company violated the Nasdaq disciplinary code on numerous occasions, mainly for late disclosures and non-adequate reporting in some press releases; they were fined 2.2 million SEK. The fine was in August 2024, but their latest violation was in January 2024; no more since then. Shorts continue to argue that there are additional “violations” regarding timely purchases by the CEO (we will address this later).

Before going into the most obvious way to debunk these claims, I want you to look at the broader picture of Intellego. Despite recent huge growth, Intellego was barely a startup in 2022; they did not even have a full-time CFO for most of 2024. So I am sure you understand that small companies undergoing lots of rapid changes (growing revenues over 700-fold from 2019) might have problems reporting everything correctly—especially for a company like Intellego that went public prematurely, being really small, which made it hard to meet regulatory compliance. Management has been chasing growth with form and processes, and things are quite different now that they are a bigger company with a full-time, respected CFO; they have undergone a deep audit by Deloitte and will continue to do so each FY.

Shorts seem to miss this point altogether, ignoring the big changes made and their implications. We don’t expect perfection from a company growing revenues over 700× in 6 years. We wouldn’t question what the company had done if they were private and then went public. They might have been promotional, as any founder is, to ensure their startup survives.

Now this is something of the past. What we see is a founder who took incredible risk with his own money, has pulled it off, and is diligently working to improve the business and build a better, more accurate, and well-managed operation.

But if you are not convinced by this reasoning, let me give you the hard facts. First of all, Deloitte did a full assessment of the company’s accounts and looked for fraudulent activities the finances of the company and found nothing wrong with them, nor did they issue any forward-looking warning. Maybe the bears will be satisfied when the full-year report again receives full clearance from Deloitte. Deloitte also acknowledged the Daro Group acquisition as something that was out of the norm but not material to the company’s present.

After Deloitte brought in the forensic accounting team and the anti-fraud team, they went over all receivables; nothing was found (they made small, immaterial changes). We are talking about a company that was under the public eye for being fraudulent—how do you think a Big Four is going to treat you knowing all of this? This is not some second-tier firm; it’s Deloitte, and Intellego is not any material part of their business, so they have no incentive to loosen their standards and risk their reputation.

And then the new CFO, who is unrelated, looked at the business itself and agreed to come on board—asking for a lower salary and more warrants, which are at 220 SEK?

So according to bears, Deloitte is allowing the wrongdoing, or Claes—without a full-time accountant—was intelligent enough to fool the accountants of Deloitte and make some type of agreement with the clients that owed them money through receivables so they told Deloitte that everything was right. Then he would have to fool not only the first CFO, which was provisional, but their second CFO to agree and receive 2028 warrants at a price three times higher than when he signed the contract. Not to mention the private placement with some funds who would have looked at the books too before investing. If Claes did all of that, he is better than Madoff, and all of this effort would make no sense, as Deloitte will come again to audit FY 2025, losing his investment in the company and all of his reputation. Yet I always say that nothing is impossible, and there is a very small % that this is all a fraud, but I think it is 1–3 % at max.

After addressing the point that the accounts are probably not manipulated, we will go to other minor accounting claims:

A big claim regarding the way financials are accounted for is that YUVIO devices are expensed as CAPEX, not OPEX. Their reasoning is that this inflates OCF and is not a good way of reporting, as these devices do not have a 5–7-year useful lifespan to justify putting them in PP&E. In my opinion this is nonsense. Even though you might think this is OPEX, the objective of these devices in the business is to be sold at zero margin to generate more dosimeter sales; there is no real basis for assuming they should have a short useful life for the client. So while this might be something to check in the future as the devices stop being used, it is, at the moment, flagrant speculation.

Intellego is actually suffering from this treatment. PP&E generates depreciation charges that would have been avoided had the devices been classified as inventory. Additionally, this accounting misrepresents Intellego as a much more asset-heavy business than it actually is (larger PP&E) and therefore confuses potential investors. Frankly, we would love capital equipment to be classified as inventory; however, having a Top 4 auditor look into the matter and guide management on the proper accounting of these devices is sufficient.

Real risks.

After debunking the “fake risks” we have to center on the real ones that represent a real threat to our investment in Intellego. The major one is receivables and cash collection

After their last earnings, cash collected significantly improved; cash flow for the first half of the year after changes in working capital was 89.8 million SEK. It’s true that this is much less than cash flow from current operations, but it is understandable due to the fast growth the company is experiencing. Next quarter we will see again if cash flow continues to improve.

Receivables are a substantial part of the balance sheet, completely true. They are 369 million, and in the past it was understandable to wonder whether or not these would get paid, but after the Deloitte audit and the significant increase in the quality of the clients, with the majority of the revenues being Likang and HENKEL, the risk looks lower—not to mention, as we will mention later, that most of these receivables are assured by the Swedish government.

What could actually present a risk is clients returning dosimeters that were not sold. This would, in fact, create a big risk and the stock would probably fall significantly on the day; but although there is a possibility of this happening, it does not look like that with Likang and HENKEL being very careful about what they are buying so as not to get stuck with inventories.

To further understand the state of accounts receivable, it is important to remember the very large five-year contracts signed with Likang, Yuvio, and soon to be agreed with HENKEL, which should, at full maturity, represent well over a billion SEK per annum in recurring sales. Thus, the absolute size of receivables could logically be high for such a fast-growing business and could remain elevated if growth is very high, as is expected over the next few years as the current contracts ramp up.

Given that receivables have been checked several times (Deloitte, Nordea, the new CFO) and that they are assured where the company feels risk is elevated—like business from Asia and other places—EKN guarantees they are going to be paid to Intellego (https://www.ekn.se/exportmagasinet/ekn-exportmagasin/intellego-oppnar-dorrar-till-nya-marknader/ ), so the risk is even lower. There is no limit on how big the assurance can be—zero ceiling for any receivable under one year, which they all are. So stay with me here because this is really important: if EKN (the Swedish Export Credit Agency) is assuring all of the receivables, there is a guarantee almost as strong as a Swedish government bond that they are going to be paid. This effectively makes the receivables almost as good as cash.

Given the fact that free cash flow has started to inflect, we think it is a fair decision by management to rely on the balance sheet to grow quickly and capture market share before the arrival of any possible competitor. In fact, we would rather “pay” with assured receivables for growth than do what other companies need to do—namely, “pay” with 40% of revenues invested in unproven, often unjustified, sinkhole marketing investments with or without questionable ROI.

Partnership related short claims:

Now it is time to address some of the claims regarding the major partnerships the company has. We will talk about Radical Clean Solutions, HENKEL, Likang, and HAI Solutions.
The claims regarding all of these partnerships revolve around the same ideas: being fake collaborations, that revenues will never arrive, that these companies do not have anything to do with Intellego, among others. So let’s address this.

HENKEL

On Henkel it’s easy, as even Sven, our good friend, announced that the partnership was in fact legit. Refer to this tweet:

https://x.com/SvenNordenstam/status/1895034170847699445

Tegus is a very reliable platform to have meetings with industry experts.

Regarding other claims, I think this recent thread is a great one, as it highlights a conversation he had through Tegus with personnel from HENKEL:

https://x.com/SharogradskyM/status/1967836693253534162

One bear claim regarding Henkel that I already addressed came from Kobayashi’s Substack, which concluded that even in a best case HENKEL would generate 22 million SEK per year—complete nonsense built with one assumption on top of another.

Likang.

Bears cannot even make major claims related to Likang; they just question whether the reported figure is excessive. Remember 1.4 billion is not the base case; this number could be accomplished if the product was rolled up to all of the Asia region. The volumes from the initial Likang contract were 360 million over 5 years, which is much more reasonable. Take into consideration that there are more hospitals in China alone than in the US and EU combined, so the market is huge.

Radical Clean Solutions.

Here I think that the bears have some good points. It does not look like this order ended up materializing, which was 60–150 million SEK. This raises concerns about the current contracts; however, the difference now is the much higher profile of the companies they are working with, in addition to the cash actually coming in from those contracts and great feedback from clients.

HAI Solutions.

This is another one that might be a little controversial. Basically, the bears claim that the success Intellego might find with this company is highly doubtful and that the company has been overly promotional in this opportunity. However, if we look deeper, we see that the company is run by people who still have a full-time job and work part-time at the venture. This is a red flag, but I still think that this could make some sense from a business perspective.
It makes sense that a doctor who has an idea, needs to fund it from his own pocket, understands this is a one-product company born out of passion, and has time to mature, will not want to burden his salary on the company. It’s not a full-time entrepreneur with visions to conquer the world. When approvals flow and money begins to come in, he will likely move full-time, grow it, and sell it to some medtech. IDK why it is odd. This is what I would have done. The man has a good living as a practicing doc—why move to a pre-rev company if he can advance it (albeit more slowly but surely and with less risk) from the outside? In addition, this is not the right stuff to get a lot of VC funding, and if he did raise more (to support himself) then he would have ended up with less % of the upside. Does not make business sense in these circumstances.
I would not put a lot of expectations on HAI, but if they end up getting the FDA approval and the sales start coming, we could see some additional upside.

Bear claims related to management and corporate governance:

Another of the major claims from shorts is the fact that management might seem shady and make some timely purchases.

Let’s see those timely purchases

Yes, it’s pretty easy to seem timely when you just buy all the time and your stock just goes up. The bear argument is the following:
The stock goes up and he bought before? He must be doing insider trading.
The stock goes down and he bought before and after? He must be giving fake confidence to the market.
With such strong logic, who am I to question it.

Real risks:

It’s true that management, and especially Claes, seems to worry a lot about giving good updates to the market. Why wouldn’t he? He has a huge stake in the company, he is young and successful, and he probably likes to see the market recognizing the value of his company. As we will later talk about when addressing one of the reports that caused the big drawdown in the company’s price, the constant increase in guidance might not be the worst way to handle the situation.

However, there is the risk that this might, in effect, be some stock-pumping scheme trying to hide something. It would be difficult, as Claes is clearly long term aligned both with his shareholding and his warrants, but worse things we have seen in the capital markets. However, the current facts do not seem to point in that direction.

Other bear claims/ risk

After patent expiry the terminal value is zero

In total, the company has four different patents that have been granted, ensuring IP protection until 2042. Intellego is also constantly working on generating further IP to enhance its platform technology, with one additional patent currently under review. Something really important that I mentioned in my first article on Intellego is that their moat is not only around technology and IP—even though they have that for almost two decades—they also have distribution and hidden switching costs. Refer to my initial article to read my expanded thoughts on that.

How many dosimeters can be used — is the market that big?

There are millions of disinfections done every day. Intellego estimated that there are 1.6 billion disinfection runs every year with UVC disinfection. This is a huge market that is growing a lot, and then curing is also another huge market—just think of everything that uses UV curing: cars, phones, and others. Only for curing, Intellego is charging 4X the price.

https://www.grandviewresearch.com/industry-analysis/ultraviolet-uv-disinfection-equipment-market

Margins being competed away.

This industry is yet a nascent industry that had a boom since COVID. Now regulation is improving, which should benefit Intellego and help them become an established player. However, it’s true that their margins could be competed away, as they have huge profitability. But I think it might not be as easy as most people think. First, due to the technology—even HENKEL, I read, tried to develop their own dosimeters, but after years they opted to go with Intellego. It is not that easy to just go for a cheaper Chinese competitor; they already exist, but they are not as reliable as Intellego. A good competitor will inevitably find its way, but it will probably take them some years to represent a threat to Intellego. For the moment, Intellego is riding the wave in a nascent industry. Additionally, even if someone comes up with a new method to create dosimeters that are as effective, they would have to go through a similar course to what Intellego went through (tests, pilots taking years) and would face the additional barrier of a market dominated by Intellego, with clients reluctant to go once more through the expensive and risky path of checking new technology when the one they are using has proved itself and is very cheap and good enough. The most likely outcome of a “competition” scenario is either Intellego buys it early—being the top-dog, best-funded company—or Intellego comes up with the science to do it better themselves.

Intellego bear case

Okay, so let’s go straight to the real Intellego bear case based on the real risks that the company has. In this scenario we will leave out the small % scenario of the company being a complete fraud.

The bear case would start with an impairment of receivables created by someone not paying (not likely, EKN secured), or someone returning the dosimeters (also not likely). This would create more uncertainty and low trust in the reported figures, which would persist until we got a clean audit from Deloitte for this FY 2025. Then the continuation would be for Likang to discontinue their contract as the product does not meet the requirements. If we are very unlucky, and contrary to all the information we have, HENKEL might do the same, leaving Intellego only with their razor-and-blade model with YUVIO and dosimeters to drive sales. How much this business will be worth completely depends on the use that clients give to the devices. If the model works and growth continues, the strong model could sustain a good valuation, capping some of the downside. Another headwind would be the lack of new clients, which would leave Intellego at the mercy of Likang and HENKEL, deserving a much lower multiple.

On the equity market side, the biggest bear case is for the company to continue to generate doubt across investors, which would compress the valuation even further until we get to Deloitte’s audit.

And the final bear case is for the company to be completely priced out of the market by a sudden new producer of better and cheaper dosimeters.

That’s the bear case that is supported by evidence. I leave it up to you to assign the probability of all of that happening.

Addressing articles:

The first article was from Sven, who has been posting bearish news on Intellego for years.

https://www.di.se/nyheter/tva-toppchefer-har-lamnat-kursraketen-vd-lagger-locket-pa/

Later in the day Montega addressed the article. I agree with their opinion.

https://www.eqs-news.com/news/research/original-research-intellego-technologies-ab-von-montega-ag-buy/ff0bc265-b96f-40f2-81bf-229dea817f62_en

Two executives are not going to change a lot: the Daro Group CEO (bears claim Daro Group is worth practically nothing) and the Director of Business Development in North America. While most of the growth came from the US, it is my belief that most of this came from HENKEL, so I am not sure what the real implications the Director of Business Development had with this growth are. It is not great news, but it is not enough to justify a 30% drop in the company’s share price.

Then the second article appeared:

https://efn.se/chefsjurist-om-intellegos-besked-flera-pusselbitar-saknas

This one was after the company announced that they had surpassed 400 million in EBIT after the market close last Friday. It seemed timely, and this article pointed to stock pumping. I agree with the claims, but I think the risk is overstated.

Intellego has increased FY guidance 2 times, surpassed it 3 times, and the increases and beats have always been pretty close. It might not be the best way to approach it, but what would have happened if management had said they were guiding to 550 million SEK in EBIT with 290 million in revenues last year? They would have been called the same—market manipulators trying to pump the stock—so I am not sure what is the best way to deal with that. The truth is Intellego is kind of trapped in a “being so good it makes no sense” situation for investors. It is damned if it says what can really happen—then condemned as an illogical pump—and it is damned if they try to give a lowball—then reality knocks with very good results.

We think the way out is explaining and reminding, in guidance, the sheer size of the contracts they have and how big the run rate is at full execution of these contracts, then warning investors that actual results may differ from guidance as the company has no way of knowing how fast its clients will want to ramp.

Regaining the confidence of the market:

I think that the company needs to regain the confidence of investors, and I think they could have early success doing the following:

1. Hold a Q&A with analysts to address questions.

2. Do not announce new guidance until next quarter, and remind investors of the difficulty of making an exact call.

3. Address the claims and acknowledge that they could be more transparent, with a clear plan toward that.

4. Buybacks or dividends would show the market that the company has real cash.

I think that all of this would be huge catalysts for the stock, and I hope that we can get past this stage where confidence—and not business fundamentals—drives the stock price.

Bottom line:

Overall, it is completely true that there are some risks and things that we must question regarding Intellego; however, I think we are losing the big picture here. Investors try to understand everything and expect the company to report much more information than one would from a company of their size. Some of that has some foundation, but most comes from bear posts that recycle the same claims over and over again and are easily believed by investors who sell and lose money in the volatility. I have purchased more in the last drop, so I am completely biased and bullish. The risk-reward is completely asymmetric for me: a company with huge growth trading at ten times FY 2025 EBIT—where can I find something like this other than Intellego? The company has a lot of potential for the coming years; most of the bear claims are simply not true, some offer partial truths, and there are real risks we covered in this article. I hope you enjoyed it and that I helped some people correctly understand the situation.

Bear thesis:

Here I refer to you to some of the bear theses that have been published recently, recycling past bear claims, I posted a comment on both of them.

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