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The flight from risk in the equity markets during the second half of 2007 was indiscriminate in its punishment of smaller companies. Across the board, small caps were abandoned and companies who were flavour of the month in 2006 and early 2007, such as catalyst developer Acta, continue to be snubbed despite good newsflow.
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In November, Acta announced a significant revenue-earning development contract, under which it is supplying its technology for creating fuel such as hydrogen from ammonia. Then this week, Acta announced the sale of its first portable, disposable fuel cell product, which is aimed at the lower end of the consumer electronics market - in direct competition with batteries.
Two years ago, this would have resulted in a stampede to buy Acta shares, but the investment environment has changed dramatically, and the price barely budged this week, edging up to 51.5p. Its shares have halved from their 2007 peak.
Acta chief executive Toby Woolrych insists that 'Acta itself could not be in better shape' after a fund raising last year, which brought Japanese conglomerate Sumitomo in as a 10 per cent shareholder. It has cash in the bank, a revenue-earning contract in place, and is making progress towards commercialisation on three fronts. What's more, global macro economic conditions - especially $100 oil - are making fuel efficiency and alternative fuel development an imperative.
The sale of a prototype portable fuel cell which can compete performance-wise with existing battery technology is a major step forward for Acta, and it could form an early market for the company. But, Mr Woolrych believes the bigger prize is likely to be hooked by Acta's electrolyser technology , which he says is creating great interest in the automotive industry.
Further progress is expected in 2008 on all three of Acta's businesses. Mr Woolrych hints: 'If this were our best announcement of the year, we would probably not have put it out in the quiet first week of January.'
Smaller companies, especially concept stocks and pre-revenue businesses, have been hit by the sea-change in sentiment. This is a shame for Acta, but its business remains on course to meet internal goals and should it continue to do so, then recognition will eventually come. For now, though, its shares are fairly priced at 51.5p.
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
