The Only Pure Play Printed Electronics Stock
In past articles we’ve talked about the potential of “The Internet of Things” (IoT) which is notion that all the objects around us can be enabled with the tiniest of microchips that can easily gather information and communicate with “the internet”. What makes IoT possible today is the miniaturization of electronic devices such as the small MEMs chips being produced by mCube which can detect motion and will enable “The Internet of Moving Things”. Companies such as Propeller Health with their smart inhalers, Proteus with their grain sized sensors embedded in prescription pills, and emicroCHIPS with their “wireless drug delivery” are all exciting startups helping to enable “The Internet of Things” in the medical industry. One technology that will enable IoT to achieve strong growth in adoption going forward, especially in the FMCG space, is that of printed electronics.
Printed electronics is a 2-dimensional printing technology in which electronic circuitry can be applied to a variety of substrates such as plastic film or labels. This should not be confused with “3D printed electronics” which would involve printing a 3D object while simultaneously embedding the electronic circuitry within the object. One company that claims to be the industry leader in printed electronics and the only publicly traded pure play in printed electronics today is Thinfilm (OTCMKTS:TFECF).
Thin Film Electronics ASA (“Thinfilm”) is a publicly listed Norwegian company with offices in the United States, Japan, and Singapore. The Company claims to be a leader in the development of printed electronics and was the first company to commercialize printed, rewritable memory. Thinfilm is creating printed systems that include memory, sensing, display, and wireless communication, all at a low cost unmatched by any other electronic technology. Manufacturing of their products is performed by their Korean partner Inktec (KOSDAQ:049550). Their technology partners include Xerox Parc who is among the top shareholders in Thinfilm. The Company recently came into the spotlight when they unveiled the Johnnie Walker Blue Label® “smart bottle” with Diageo in March:
This bottle comes with Thinfilm’s NFC OpenSense product which is in the form of an intelligent label that can communicate using “near field communication (NFC)”. These thin, flexible labels can also detect a product’s sealed and open states and wirelessly communicate contextual content with the tap of an NFC-enabled smartphone or device. The technology also allows Diageo to track bottle movements across the supply chain, in-store and to the point of consumption.
Diageo says that of the millions of web searches they receive from customers who are looking to learn more about their whiskey, 50% take place in the store right in front of the bottle. Now Diageo can send targeted messages to customers as they make a purchasing decision. Additionally, the label also knows when the bottle has opened so it can change the content according; perhaps mixed drink recipes or even a coupon for a second bottle. This proof of concept seems to have attracted the right attention. Just today, Thinfilm announced that they have signed additional agreements with leading companies in the spirits, tobacco, and fast moving consumer goods (FMCG) industries. These agreements include orders for demonstration systems featuring Thinfilm’s NFC OpenSense product.
Thinfilm’s revenues for 2014 totaled around $4.5 million USD while operating costs were significantly higher at $28.9 million USD leading to a loss of $25.8 million for the year. Revenues for Q1-2015 came in at just $698,000 USD, the decrease year-on-year being a consequence of “fewer project milestones being met during the quarter and lower JDA activities” according to Thinfilm. Losses for the same quarter were $6.7 million and as of March 31 2015,they had $23.5 million in cash on hand. Thinfilm posts all their financials in English so there is good transparency into their operations. The numbers are simply stated with a great deal of accompanying information as opposed to the mess you might see looking under the hood of your typical OTC stock. Which leads us to our next topic.
While we always warn investors about the dangers of over-the-counter stocks, there are instances where a foreign company will make their shares accessible to U.S. investors by offering their shares on the OTC market . This is exactly what Thinfilm has done as stated on their website:
Thinfilm’s website mentions the ticker TFECY , though it appears that they also trade under the ticker TFECF. The price difference between these two issues most likely reflects the fact that each ticker represents a different number of shares. TFECY ($8.33) probably represents a 1 to 1o share conversion of TFECF (.818) with the latter appearing to have more trading history and consequently volume. Quotes for the Norway issue (THIN:NO) can be found at this link.
In the investor section of their website, Thinfilm claims to be “The only pure-play, public company in printed electronics”. How long will it be until we see other companies enter this space? Are there other publicly traded companies now that you think deserve to be classified as “pure plays” for printed electronics?