Nanoco’s First Quantum Dot Televisions
Quantum dots are tiny bits of semiconductor crystals that are less than 10 nanometers in size. These nanomaterials exhibit remarkable properties that open up a broad array of applications such as biological tagging, LEDs, displays, and even solar cells. Nanoco (LON:NANO) first came across our radar a few years ago as the only publicly traded pure play company for investors to receive exposure to quantum dots that wasn’t an OTC company . Nanoco has a patent portfolio of 200 pending patent applications, 70 granted patents, with 29 patents being granted in the 12 months ending 31st July 2014. This intellectual property portfolio addresses four main applications areas Nanoco is targeting with their cadium free quantum dot technology:
Let’s look at the progress being made in each area.
This has been the most-watched area given that quantum dot technology in televisions shows promise and investors are quite excited about Nanoco’s high profile relationship with Dow. Dow is currently marketing Nanoco’s quantum dots under the brand name Trevista, and has exclusive worldwide rights for the sale, marketing, and manufacture of Nanoco’s cadmium-free quantum dots for use in electronic displays. Earlier this year, LG Electronics signed a partnership agreement with Dow to use Nanoco quantum dots for the new LG Ultra HD ColourPrime TVs which are close to launching in the USA. This would represent royalties to be claimed for the first consumer electronics products to incorporate Nanoco’s technology. It is worth noting though that Nanoco previously agreed to a lower royalty rate from Dow in exchange for not having to commit capital to Dow’s quantum dot production facility that is expected to begin production in 2015.
Nanoco has a joint development agreement with Osram, one of the world’s largest lighting companies. The second phase of the Osram agreement is a 12-month product development effort which is expected to end in October 2015. Just last week, Nanoco announced an additional joint development agreement with Marl International. Technical design teams from both companies have focused initially on LED linear strips and ceiling mount flat panels with both lighting designs currently available for customer demonstrations.
Nanoco claims to have now reached a 15% solar cell efficiency which they believe is close to the level that would be the minimum required for low cost, printable solar panels. The Company claims to be “currently considering how best to advance this application” following the merger of their former development partner, Tokyo Electron, after which solar was no longer a focus for the newly merged entity.
Since 2011, Nanoco has been working with University College London on using cadmium-free quantum dots in the in-vivo imaging of cancer… The only update provided is that a second grant-funded project began in October 2014 with University College London.
Nanoco reported interim results for the six months ending 31 January 2015 with revenues climbing to $2.37 million USD from $1 million USD a year earlier with pre-tax losses narrowing to $6 million USD from $7.4 million USD over the same timeframe. While progress is being made, it’s slower than some investors expect. In our last article on Nanoco, we noted that Liberum Capital expected Nanoco to achieve a $5.6 million pre-tax profit in 2015. This does not seem likely given the recent mid-year results. The question on every investor’s mind has to be just what amount of royalties could Nanoco expect to see from the LG TVs? Unless this is a meaningful number, it may take a while for all of the potential application areas to achieve commercialized products that would together provide a meaningful and diversified revenue stream for the company. The longer this takes, the more likely it will be that Nanoco will have to raise funding again and dilute existing shareholders. In the meantime, the Company has perked investors’ interest with Nanoco’s stock (LON:NANO) up +32% in the past month and +14% today alone bringing Nanoco’s market cap to around $429 million. U.S. based investors can also trade Nanoco under the symbol (OTCMKTS:NNOCF).
Here at Nanalyze, we write about tech stocks a lot, but most of our money goes into a dividend growth strategy. Our 30 dividend stocks provide an income which increases every year. Find out how to build your own growing income streams with dividend growth stocks - Quantigence - A Dividend Growth Investing Strategy - freely available to Nanalyze Premium subscribers.