3 Reasons Graftech (GTI) is Not a Graphene Stock
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In an earlier article titled “Investing in Graphene” we discussed the incredible properties of the nanomaterial graphene, and that there do not seem to be many options for investing in the graphene story at present.
One company that is mentioned by many as a possible pure play in graphene is Graftech (NYSE:GTI) one of the world’s leading manufacturers of carbon and graphite products for industrial applications in a diverse array of industries with a market cap of about 1 billion dollars. However there are three reasons this does not seem to be a good way currently to invest in graphene.
Revenue Sources
In 2012, 82% of revenues came from the industrial materials segment which provides Graphite Electrode, Refractory, and Coke products to the steel industry. The other segment, Engineered Solutions, contributed 18% of revenues and encompasses electronics thermal management, graphite parts and blocks, advanced composites, and graphite powders. Nowhere does there appear to be a dedicated segment focused on commercializing graphene.
Stated Company Focus
In the latest August 2013 company investor presentation, graphene is not mentioned once. In the 2012 10-K, graphene is not mentioned once. Nowhere on the website is graphene mentioned except once for one job opening for a Graphene Materials Scientist. If the company believes their focus on graphene would benefit shareholders in the future, would this not be mentioned somewhere?
Where has the patent research gone?
In 2011 the UK Intellectual Property Office published a study on Graphene Patents aptly named “An Analysis of Worldwide Patent Filings Relating to Graphene”. In this report, Graftech is listed as the top 12th holder in the number of graphene patent families behind Nantero. However, in this same report it is noted that Graftech has not had any graphene patent activity since 2007.
Strangely the top two applicants, Samsung and Sandisk, are new entrants to this technology having only been active as far as patent data since 2007. A simple search of the U.S. Patent Database shows 21 patents that contain the word “graphene” with the Assignee as Graftech. Only 2 of these patents (Cycling LED heat spreader and Uniform graphite plate) were filed after during or after 2007 with the latest filing being March 10th 2008.
However in general, patents may not be that important this early on. In an October 2010 article published by Nature the co-inventor of graphene and Nobel laureate, Andre Geim, was quoted as saying:
We considered patenting graphene; we prepared a patent and it was nearly filed. Then I had an interaction with a big, multinational electronics company. I approached a guy at a conference and said, “We’ve got this patent coming up, would you be interested in sponsoring it over the years?” It’s quite expensive to keep a patent alive for 20 years. The guy told me, “We are looking at graphene, and it might have a future in the long term. If after ten years we find it’s really as good as it promises, we will put a hundred patent lawyers on it to write a hundred patents a day, and you will spend the rest of your life, and the gross domestic product of your little island, suing us.” That’s a direct quote.
In the same article Andre Geim made the following statement regarding the first potential usage of graphene:
Two or three months ago, I was in South Korea, and I was shown a graphene roadmap, compiled by Samsung. On this roadmap were approximately 50 dots, corresponding to particular applications. One of the closest applications with a reasonable market value was a flexible touch screen. Samsung expects something within two to three years.
Conclusion
Given a majority of Graftech’s revenues do not appear to come from graphene, the discontinued filing of graphene patents by the company, and a general lack of stated focus by the company on graphene, this may not be the graphene pure play that many are claiming it to be.
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Excuse the absence of my site as I am redesigning it currently and will be back up and providing you with the information you desire. On a note regarding GTI. They indeed hold a patent in regards to thermal dispersion. However my research has shown that the WIPO standards have not been met so such patent is not enforcable.
I’m sorry but your research regarding Graftech’s patents is very erroneous which has led you to an erroneous conclusion about it’s inevitable profitability. The UK Intellectual Property Office quote is correct but Graftech’s Engineered Solutions Division has been developing advanced graphene materials since 1999 and has vendor relationships with all the companies you cite as significant patent holders. It has aggressively protected it’s patents. NASA’s Curiosity rover used Graftech’s technology in it’s thermal heat shield when landing on Mars. So just because they have filed “recently” indicates how late to the game this article is regard Graftech’s potential. I’m buying.
Hi sbk,
Our article on Graftech is nearing several years old and it is certainly possible the situation has changed. One major change we noticed is that the stock price has now lost over -49% since our original article, the reason of which would be good to know. One thing for sure is that if a majority of the company’s revenues still come from selling graphite products to the steel industry, then they haven’t made much progress towards commercialization. Has management at Graftech stated an intent yet to pursue commercial opportunities in graphene?
Lomiko is an investor in Graphene 3D Lab (OTC: GPHBF) and in Graphene ESD (private) but our “grade” from this site was ‘hardly’ a graphene play.
The site in general hasn’t provided any great insights. They have ‘pumped’ other companies such as Applied Graphene Materials (LON:AGM) but now are wondering what happened. Recently, Graphene 3D Lab announced the start of commercial sales. Trading at .80 it IS a graphene play and we are looking forward to revenue numbers next quarter.
Hi Paul,
There are 306 articles published on Nanalyze presently and just 7.5% of these articles are about graphene companies/investments/products/etc. Just one article on the entire site is dedicated to Lomiko. We never pump or bash any company, we merely present information that investors may find useful. Regarding your statement that we were “pumping” AGM, you may want to read our last article about them which was published in November of last year:
https://nanalyze.com/2014/11/whats-happening-to-applied-graphene-materials/
Like yourself, we’ll also be very interested to see the Graphene 3D Labs revenue numbers when they are made available.