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Commercial revenues elusive at Nanoco

The group is waiting for its commercial partners to launch their products
October 17, 2018

Another year, another delay in the arrival of commercial sales at Nanoco (NANO). The quantum dot specialist has been forced to admit that revenues in the year to July 2019 will now be lower than previously expected owing to further setbacks in the launch of products that use its technology. Broker Peel Hunt has cut its 2019 revenue guidance from £8m to £7m as a result.

IC TIP: Buy at 32p

But the problems that have caused the delays are largely outside of the group’s control. Nanoco’s quantum dots are ready for use in digital displays and lighting, but the final products (which are being made by one of the group’s global partners) are not yet prepared for commercial launch.

The main risk for the group is that its cash will run out before the substantial commercial revenues arrive. That’s why management has slashed average staff numbers by 22 per cent and reduced professional fees by £0.3m in a bid to keep costs down. Operating losses in the year to July 2018 fell 32 per cent to £7.4m as a result, while the balance sheet has been bulked up by a £7.9m fund raising. Chief executive Michael Edelman is confident that the group “has enough cash to see us through to commercialisation of the technology”.

NANOCO (NANO)   
ORD PRICE:32pMARKET VALUE:£91m
TOUCH:31-32p12-MONTH HIGH:50pLOW: 22p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:4p*NET CASH:£10.7m
Year to 31 JulTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20141.40-9.1-3.7nil
20152.00-10.9-4.1nil
20160.50-12.6-4.5nil
20171.33-10.9-3.8nil
20183.32-7.4-2.2nil
% change+150---
Ex-div:na   
Payment:na   
*Includes intangible assets of £3.4m, or 1.2p a share