Commercial sales are finally beginning to materialise at Nanoco (NANO). Chief executive Michael Edelman admits that he may have been a little optimistic about the time frame for revenue generation from his company’s novel quantum dots – which can be used to emit light using very little – but says that eight of the commercial programmes will begin generating sales in the second half. Indeed, broker Peel Hunt expects revenues in the 2018 financial year (which ends in July) to be roughly six times higher than the £1.3m generated in FY2017.
Sales may have been a long time coming, but investors can at least take comfort from the fact that Nanoco has reduced its spending. In 2017, management removed 50 staff and £400,000 of costs every month, meaning operating losses narrowed to £4.8m from £6.4m in the first six months of FY2017. The balance sheet is also looking healthy following the £8.6m fundraising last October.
Beyond the current financial year, Nanoco’s prospects are even more exciting thanks to its recent commercial agreement with a large US corporation for the manufacture of electronic nano-particles. The company is paying to increase the manufacturing capacity at the group’s Runcorn facility and will start ordering products in early 2019. Therefore, the first adjusted pre-tax profit of £7.2m is expected in FY2019, giving EPS of 2.4p (from -£5.4m and -2p in 2018; and -£10.7m and -3.7p in 2017).
| NANOCO (NANO) | ||||
| ORD PRICE: | 36p | MARKET VALUE: | £101m | |
| TOUCH: | 35-36p | 12-MONTH HIGH: | 47p | LOW: 18p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 5p* | NET CASH: | £8.7m | |
| Half-year to 31 Jan | Turnover (£000) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 676 | -6.4 | -2.3 | nil |
| 2018 | 196 | -4.8 | -1.6 | nil |
| % change | -71 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £3.2m, or 1.1p a share | ||||
