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Nanoco Group PLC

Nanoco Group On track for an inflection in FY20 – Edison Research

Nanoco Group (LON: NANO) AGM statement flags that good progress is being made in both the Runcorn site build out and developing next-generation materials for the major US client. Guidance for FY19 revenues is re-affirmed and the company remains well placed to deliver an inflection in revenues after that.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

EV/sales
(x)

P/E
(x)

07/17

1.3

(10.6)

(4.5)

0.0

62.3

N/A

07/18

3.3

(7.1)

(2.6)

0.0

24.9

N/A

07/19e

6.7

(5.6)

(1.9)

0.0

12.4

N/A

07/20e

13.0

(2.1)

(0.7)

0.0

6.3

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments

Nanoco remains on track to start volume production for its major US customer in H1 FY20. The build out of the Runcorn facility is on schedule to complete by the end of the calendar year, which will pave the way for commissioning, stress testing and optimisation in calendar H119. Progress to plan will trigger the milestone payments that underpin our FY19 forecasts and FY19 guidance of revenues broadly doubling has been maintained. The new facility’s footprint gives an indication of the significant revenue potential from this relationship once volume production starts. The company also reports making good performance in developing the next generation of materials for this client.

Outside of this relationship, the timing and rate at which development initiatives move to commercialisation is difficult to gauge, but we still see good revenue potential from display and horticultural lighting in the next 24 months. The company’s US customer relationship also emphasises Nanoco’s status as a key protagonist and IP holder in emerging technology, which is witnessing increased development activity across a number of fields. We highlighted the growth in patent applications that mention quantum dots in our October note, Building foundations for volume uptake in FY20.

The full Edison report can be viewed using the link below.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.