LON:SYM | Symphony Environmental Technologies – Under The Radar High Flyer?

21st Mar '18 by iwright7

12 comments 5629 reads

I have today taken an initial position in another little known (to me anyway) microcap "High Flyer" whose niche and metrics intrigue me. My notes to date:

Symphony Environmental Technologies (LON:SYM) core business is a licence for a US patented additive made by EPI Inc to improve polythene biodegradability. The company has also developed other anti-microbial and fire-retardant additives. With Sir David Attenborough on the plastic offense I can envisage the environmentally aware supermarkets failing over themselves to be the 1st to launch a biodegradable plastic packaging range.

Mid-month Symphony results show a significant earnings uplift. Recurring sales revenue with good recent exports to Saudi. Excellent 3M RS with QM of 93 and F8. Moderate operating margin which should improve with operational gearing. Sexy environmental benefit story.

Overall an expensive for EPS penny story stock, that looks like its coming good. Does anyone know more for bull/bear case please?

Video http://www.proactiveinvestors.co.uk/companies/stocktube/8877/symphony-environmental-says-world-at-tipping-point-in-solving-plastic-problem-8877.html

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Fegger

21st Mar '18

I was interested and met them at one of the London investor shows about 4 years ago. I found out that the additives they use didnt make polymers degrade when put in land fill. That meant that for me it wasnt so interesting at that time because a high level of UK waste goes to landfill with a small amount to incineration. They did mention high Saudi interest at the time . They have obviously made a lot of progress in the last 4 years. But I still wonder about a PE of 66. There are a lot of potential competitor products out there!

potter12

The company's main product seems to me to be an additive which makes plastic packaging and bottles harmlessly degrade if they get into the sea or rivers. The end product of the degradation is said to be a slime which is similar to the result of seaweed degrading naturally.
So the advantage of this additive is that is is ideal for countries who do not have the "sophisticated" recycling systems of advanced countries. These countries may accept that it will take years and huge investments in recycling plants and processes to reach a satisfactory level of control of waste. Symphony's additives give them a short to medium term solution which makes their inevitable plastic waste less harmful and bio-degradable.

This is my laymen's summary , of course dyor.

I do have a modest holding.

iwright7

Fegger - Yes I noticed that on their website - Needs Oxygen, not a lack of Oxygen as in you would get in a deep landfill. I guess though that the additive does help poly bags degrade as surface litter, or floating in the rivers/sea, which is what we see.

daveinthelakes

I had a good look at them a couple of months ago and a couple of concerns are that they do not own the main IP and in a fast moving industry with lots of research trying to find the holy grail of plastics recovery/degradability they appear to move at a slow pace. I got the feeling that some big operators will move into this sphere and at a much quicker pace?

Dave

10th Apr '18

A nice price lift from today's RNS...

Symphony Environmental Technologies a global specialist in products and technologies that "make plastic smarter", welcomes news reported in Pakistan that the Supreme Court of the Sindh Province has ordered the government to enforce The Sindh Environmental Protection Act (the "Act") and that the police had been directed to take action against those who violate it.

The Act, which was passed in 2014, provides that no person shall import, manufacture, stockpile, trade, supply, distribute or sell any scheduled plastic product which is non-degradable. The scheduled plastic products must be oxo-biodegradable and the pro-degradant used must be approved by the Environmental Protection Agency. Sindh is an important province of Pakistan with circa 48 million people, and includes Pakistan's largest city, Karachi.

More information here: https://www.pakistanpoint.com/...

willhampson

I attended a smallish presentation by the finance director at last year's UK Investor Show. He came across as passionate and knowledgeable in the area. However, like Dave above, I was very concerned by the fact that they have no IP protection whatsoever over their products (sorry if this has changed in last year or so). When posed questions on this topic, the finance director didn't really seem to have a sensible answer, other than a generic response that he believed their brand was respected. This was enough for me to write-off any investment here as I fear they will get blown out of the water at some point by cheaper competitors, particularly from the Far East.

At the moment Symphony Environmental Technologies (LON:SYM) seems a decent momentum trade as there is a wind of recent good news on the increasing shift away from plastics and regulation against it in favour of sustainables. I can't, however, overlook my concerns so can't see myself getting involved. I wish all holders the best.

I looked into the patent aspect before buying my original holding. Symphony Environmental Technologies (LON:SYM) do have a patent licence from EPI Inc. The Symphony 2001 AIM admission document has more detail and minimum volume clauses:

EPI is a private company incorporated in the USA. It owns a US patent relating to the manufacture of chemically degradable plastic fim and has filled a patent pending at the European Patent Offce which cites EPI as the owner of a European patent derived from and mirroring the US base patent.

The EPI Licence contains provisions under which Symphony Environmental must, throughout the term of the agreement, make minimum purchases of the additives. If Symphony Environmental fails to achieve the minimum purchase requirements EPI may either terminate the exclusivity granted to Symphony Environmental and/or terminate the EPI Licence.

Details here https://patents.google.com/pat...

So it looks to me as though this EC patent was granted in 2004, so whilst Symphony Environmental Technologies (LON:SYM) may not own the patent, they come under the US parent patent umbrella. Please though DYOR Ian

Of course, fair answer! It may be worth checking with the company though. It was my wife, who is an IP litigator, who was asking the questions re the IP protection and the answer from the FD was that they had no protection. Perhaps it is not his area, but that was the answer on the day. Just flagging if of use to you. All the very best.

mrosbiston

17th Apr '18

some of the recent weakness could be down to this.
https://www.telegraph.co.uk/news/2018/04/16/plastic-eating-protein-created-british-laboratory-could-bring/

this is not anything new, something similar came out in 2016 (see below) - Symphony Environmental Technologies (LON:SYM) will continue to remain a speculative position for me, comfortable with some of the froth - will only exit if earnings are unable to keep up with the story.
https://www.sciencealert.com/new-plastic-munching-bacteria-could-fuel-a-recycling-revolution

MiserableJacktPotato

From what I understand, please correct me if I am wrong - the proteins are good for plastic bottles, whereas £SYM's additive targets cling film and polystyrene type plastics.
The proteins aren't anywhere near commercial viability either.

From waht I understand the development enzymes (proteins) are targeted at semi-rigid PET (pop bottle) plastics, but SYM additives help to degrade polythene (bags/bin liners) - Two very different materials.

poe and iwright - completely agree with you both, just picking out the headline most likely behind the drop in the last two days and scaring out a few weak hands - valuation had got a bit stretched as well.

Symphony Environmental Technologies – Under the Radar High Flyer?

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Iwright7

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