Ilika: A Solid State Lithium Battery Stock
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There’s a concept in finance called “home bias” or “domestic bias” which states that as investors, we’re most likely to buy stocks that trade in the countries we call home. Increasingly though, platforms such as Interactive Brokers allow investors to trade stocks on multiple foreign exchanges uncovering some interesting lesser-known stocks that provide exposure to disruptive technologies such as solid-state batteries. Our last article on Cymbet showed a very successful startup that is now dominating the solid-state battery market. One publicly traded company looking to enter this same market is UK based Ilika.
About Ilika
Founded in 2004, UK based Ilika (LON:IKA) was able to secure VC funding which culminated in an IPO on the London Exchange in 2010. In looking at their most recent annual report, we see +73% institutional ownership which is a very positive indicator. Institutional shareholders are likely to subject the company to a very high level of scrutiny which is needed to ensure management is held accountable for executing against their stated business plan. This is something sorely lacking with most micro caps and all OTC companies. Ilika states that their most important KPIs are cash position and their operating loss, words that should be refreshing to hear for investors. For fiscal 2015, the Company saw a slight improvement in revenues and operating losses as seen below (in GBP):
Since their IPO, shares have seen volatile trading but are up +28% at the moment giving IKA a minuscule market cap of just $76 million.
So what does Ilika do? The Company’s product offering is a “materials discovery process” which they claim can evaluate various material combinations in an automated fashion which allows them to discover materials much quicker. A process that has taken historically 7 to 10 years is reduced in time by 100 fold using a high-throughput physical vapor deposition process. While in the past they have worked with large corporates such as Shell (hydrogen storage technology), Toyota (battery materials), and Boeing (aerospace alloys), Ilika’s recent focus is on solid-state batteries.
The reason for focusing on solid-state batteries is the astronomical growth expected from this market. The global market for solid-state thin-film batteries was $66 million in 2013 and is expected to reach almost $6 billion by 2019. Ilika’s highlights for 2015 include the commencement of a pilot production plant for solid-state batteries which has achieved a 20 times larger deposition area for their battery materials and a 5 times increase in materials deposition rate. Over the year they were granted several patents relating to their battery technology, realized a 25 increase in battery size, and signed a contract with a commercial partner to develop a proof of concept battery for wireless sensor networks. Their technology replaces the traditional lithium battery electrolyte with a ceramic ion-conducter, and as of 2014, allowed them to produce stacked solid-state lithium-ion batteries, the worlds first they claim.
Conclusion
All seems to be on track for Ilika, and now they need to scale-up to production prototypes and begin signing some licensing deals. While they continue to make progress in other interesting areas, like self-healing alloys for 3D printing, the big payoff for investors is expected to come from solid-state batteries.
Share
I think an article is needed to compare Illika (IKA.L) with QuantumScape (QS).
They are both solid state battery stocks.
An update on Ilika is probably needed since we last looked at them 6 years ago.
A cursory look at their financial picture shows they still haven’t achieved meaningful revenues and the trend recently changed in the wrong direction. We’d cover the firm again if they can breach the $10 million revenues mark ($2.5 million in one quarter works too).
I found another solid state battery stock (so we have 3 stocks available): Solid Power.
US solid-state battery specialist Solid Power, backed by Ford and BMW, announces its IPO. For the targeted listing on Nasdaq under the ticker symbol SLDP, Solid Power is merging with SPAC company Riverstone Holdings LLC’s Decarbonization Plus Acquisition Corporation III.
Thanks for posting. Solid Power has been added to our research queue for coverage.
Currently Ilika has a small revenue from UK grants. The meaningful revenues are likely to start in 2024.
Ilika so far proved it is progressing well on its plans, so I think waiting for meaninful revenues means missing on stock price gains that are likely happen between now and 2024. Better option is gradually accumulating position, especially when there are price drops along the way.
We totally disagree. The entire premise of our investment methodology surrounds not investing pre-revenue because far too many companies never manage to achieve product market fit. Many of these examples can be found on UK exchanges. We’re more than happy to miss out on some upside for several success stories than lose meaningful amounts of money on the hundreds of companies that never achieve what they set out to do.
I just watched interview with Ilika CEO.
They will start selling Stereax batteries (they are micro batteries) in Q2 2022 – from mid scale production facility they are building now. So that’s when they start having first revenues. Stereax batteries have medical uses and for IoT devices.
As for Goliath batteries (they are larger power batteries and can be used in EVs and power tools) – Ilika needs 18 months to automate the production processes and then they will be moving to start small scale production at UK BIC facility. My guess is Goliath batteries could bring revenues in 2024. Ilika wants to licence Goliath technology to some big battery manufactures or create JV with them.
Obviously the big question is how well Goliath batteries can compete with solid state batteries from QuantumScape and Solid Power.
We could (excuse the French here) give two shits what the CEO says or what the forecasts say. When there are some meaningful revenues, we’ll take another look – not this 600K GBP a quarter rubbish. Until then, we could care less how compares to . Zero interest in wasting time debating that.