Investing in Quantum Dots with Nanoco

Nanoco_Logo

In an earlier article titled “Nanosys Focuses in on Displays and Energy Storage” we discussed the use of quantum dots in displays. One publicly traded company, Nanoco, is a pure-play publicly traded company for investors who want exposure to the quantum dot display story.

History

Nanoco is a nanotechnology company located in Manchester, United Kingdom, founded in 2001. The company is a spinoff of research pursued at the University of Manchester. In August 2012 the company received 1.1 million dollars in grants from the UK government. In May 2009 Nanoco floated in the UK stock on AIM (LON:NANO) and also has an ADR for US investors to access (OTCMKTS:NNOCF). Since the ADR was made available to investors in April 2009 the stock price has performed quite well.

Nanoco_Stock_Price

The spike seen in the above chart around early January 2013 was this announcement by Dow stating that Dow and Nanoco have entered into a global licensing agreement for Nanoco’s cadmium-free quantum dot technology. Dow will have exclusive worldwide rights for the sale, marketing and manufacture of Nanoco’s cadmium-free quantum dots for use in electronic displays.

Nanoco will receive royalty payments related to Dow’s sales of cadmium-free quantum dots and Dow intends to build production capacity in Asia to produce Nanoco’s quantum dots. Full commercial production is expected to begin in the first half of 2014.

Cadium Free

In an earlier post about Nanosys, we discussed the problem of cadium quantum dots, mainly that the use of Cadium is restricted in Europe and other regions of the world. Samsung had invested 15 million dollars into Nanosys to help fund their development of cadium-free quantum dots. Nanoco already has this problem solved. They state a significant advantage of their technology is the ability to scale it.

In the past Nanoco did try to sell cadium quantum dots but ran into problems with Nanosys. In July 2009 Nanoco settled a patent infringement lawsuit with Nanosys. Nanosys claimed that Nanoco’s Cadmium based quantum dot technology which was being distributed in the United States, infringed upon some of their patents. In the settlement, Nanoco did not admit that the patents were either infringed or valid but agreed to terminate its U.S. business for Cadmium quantum dots. Regarding the lawsuit, Michael Edelman, Chief Executive Officer of Nanoco stated: “Nanoco will continue to develop and deliver leading quantum dot products throughout the world with a specific focus on its heavy metal free technology.”

Financials

Nanoco has a current market cap of around 495 million dollars. Latest financials for Nanoco are given as follows in GBP:

Nanoco_Finacials

66% of their revenue comes from Asia. As of January 31st, 2013, the company had 19.2 million dollars in cash.

Market Potential

The following remarks were taken from UK based Shares Magazine titled “Nanoco Ready to Ramp Up”:

A report in March from technology analyst Wintergreen Research predicts the quantum dot LED (QLED) display market will hit $6.4 billion by 2019 from a standing start just a couple of years back. According to Wintergreen, Samsung reckons QLED displays could cost half as much as LCD or organic LED (OLED) panels. It also estimates 80% better energy efficiency, for thinner devices with a sharper display.

In a future article, we will discuss a private company in this space whose technology is behind the recently released Sony Trilimnous televisions that utilize its quantum dots.

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