LON:VRS | Versarien Part 3 - Graphene Competitors

27th Jan '18 by MikeBrenner

28 comments 14691 reads

Due to the size of my research i'm splitting it into 3 posts

This post is part of a series on my research on Versarien

Part 1 - A Background to the Graphene Marketplace

Part 2 - A deep dive into Versariens Business

ADVFN - There are some really good ADVFN posters who are long term investors in VRS, have attended shareholder open days / AGMs and have excellent insights and research that they share especially Superg1, bones, Atoxyl, compounup & severnof9 who have informed a lot of my own research and I have shamelessly copied some of their insights. Obviously, you have to wade through a load of rampers, derampers and nutters that seem to frequent ADVFN but hopefully we can get a decent level of discussion and sharing of insights going on Stockopedia instead.

Finally, it’s a bit nerve wracking doing my first posts on Stockopedia especially with the quality of writers here already – I’m dyslexic and it’s something I struggle so hopefully you find enough quality within the quantity! You can find me @MikeWBrenner where I retweet a lot of my graphene / Versarien research

Competitors

There will be many companies that win over time as advanced 2D materials are commercialised, as there are 1000's of combinations of uses in 1000's of products and new technology. The question is who is going to be the pack leader and first major mover?

Hundreds of companies have claimed over the last 10 years to be able to produce and manufacture graphene all promising incredible benefits to their customers and amazing shareholder returns however £$€¥ millions have been lost by investors.

VRS have first mover advantage and UK PLC have invested £1 billion in graphene infrastructure to create a unique flywheel that becomes more and more difficult to replicate / catch up with day by day

The competition for producing graphene hasn't started to arrive at scale … It will arrive over time (and probably sooner than I think as its benefits are so disruptive) but there is plenty of catching up to do. Below is a more detailed teardown of competitors you are likely to come across in your research with my opinions on them – this is not exhaustive but…

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loneranger

28th Jan '18

This comment has been moderated

Mike

AGM lied in news (century rod launch) and lied about case ups, it's under investigation by the FCA. The last comms I have are a requests for the emails that show the news is untrue.

The tech is also still not proven to work only a small level of production is quality as per their various annual reports. They repeatedly state they have not managed to scale it up. That has not changed as far as I know.

nigelpm

Nigelpm is making some strong comments about something he knows little about and some is very misleading.

Is that right? Fancy backing up your assertions?

gus 1065

21st Sep '18

I’m not a holder of Versarien (LON:VRS) , but if it’s of interest, PrimaryBid have posted a subscription offer this evening at 145p per share (18% discount to the closing price) for a minimum of £2.9m of shares. Here is the link to their website.

https://www.primarybid.com

Offer closes Sunday evening or possibly earlier if oversubscribed. No position and not planning to invest.

Gus.

Mark Simpson

The issue I have with Versarien (LON:VRS) is that despite all the potential of Graphene they seem to have spent so little R&D on it. £300k is peanuts in technology research. I simply don't buy that all these university Research Departments are funding all the costs of research and letting Versarien (LON:VRS) use it for free. Equally, I don't buy that a Chinese manufacturer is going to fund a factory for free to produce Graphene for VRS. There is nothing stopping either group taking any Versarien (LON:VRS) tech and giving/paying them nothing.

So when sales of Versarien (LON:VRS) graphene are less than £50k (IIRC) last year then either they are demand constrained which means that there is a lack of market for the product. Or they are supply constrained and their £300k R&D spend is no where near enough to get to scale manufacturing.

I can't think of a single tech company that has spent very little on R&D, has negligible sales yet managed to create a unique, patent protected product that sells at high margins in significant quantities. I just can't see any number of RNS'ed collaboration agreements overcoming those simple business facts.

Taff6

22nd Sep '18

Mike excellent post, thanks
From the little research I have done, one of the issues with graphene was that of commercialising and its use as a material in consumer products being limited. However as I'm sure you are aware of, there are early signs that this is changing and it would appear that the potential could actually be vast in many industries where traditional material such as carbon steel and aluminium are used.

https://www.cyclingweekly.com/...

ds1980

19th Feb '19

Mike. I have no interest in VRS short or long but I am genuinely interested in why anyone would want to invest in a sociopath? It can only end one way.

Pennyledges

25th Feb '19

Excellent posts...well done and look forward to reading more

Ramridge

28th Feb '19

A bit puzzled by the huge drop in SP since the China Update on 4 Feb. The drop has been near 50%.
The update wasn't bad news, just another one of MOU and JV announcements that the company has been feeding the market in drips.
So, what is really behind the sudden sharp drop?
Would be interested in people's views.

Declaration: No position, but have been following it closely.

hayashi22

I think the market cap of VRS at over £100m is way too high for the present position with regard to sales and expected profitability. Would have thought £50m should be about where it's at ...very difficult to value. still loss making so driven by sentiment.Worth a look below 40p IMO.

GrahamF

Ramridge, I think the announcements of collaborations etc. have become counter productive. Is a collaboration something you do when neither party can see a clear path to a commercial deal?

It is relatively easy to accept the story that Versarien (LON:VRS) have high quality few layer graphene. So, technically the product(s) are good. But can they make them at a cost that is acceptable? I think there is a suspicion that so far they cannot otherwise they would have firm orders by now.

The bulls will argue that it is still very young technology and we need to be patient. However, it has been many years now since graphene was discovered. Added to that, we know that a high number of organisations will have been working on this problem and appear not to have cracked it. What’s the likelihood that Versarien is the one that gets there ahead of everyone else? May be they will but may be not for another five years. Who can tell?

Lastly I find the focus on China very suspicious. Surely there must be a very high number of high tech companies in Europe and USA that are highly innovative and might get a product incorporating nanene to market faster. Perhaps most of these collaborations in China are more to do with making the stuff in volume if orders do eventually arrive and so irrelevant unless a commercial product finally makes it to market.

Incidentally my Head skis incorporate graphene (at least according to Head they do) but as Head have been doing this for 2 to 3 seasons now it cannot be nanene. Is nanene perhaps like extremely high grade steel - no one doubts its quality but the price is too high for anything other than niche applications? Skis are a pretty niche application but it seems that someone else beat Versarien to it here.

As someone said on another thread, holding Versarien (LON:VRS) at the moment is like holding a lottery ticket. It may pay off big time but it may turn out to pay nothing at all. The longer firm orders take to appear, the more likely it is the later. So shareholders gradually head for the exit and what was a trickle has become a flood.

(Disclosure - Former holder of VRS)

FoolishBen

Hi Ramridge. I have held Versarien for about a year and have naturally been following closely. I would say that around 180p the price had gotten well ahead of its self, mainly due to the belief that they we're going to land some very big deals with firms in USA / China. Unfortunately the commercialisation of a new wonder material takes longer than than your typical private investor expected, especially as Versarien have chosen to focus on working with large, complex multi-national companies as well as directly with the Chinese government. When the deals didn't land within the expected time-scales, low level shorters started to target the firm and have been ruthlessly trolling them on Twitter and the bulletin boards. It is also worth noting that the main institutional support came from Milton and Herald's Micro Cap funds. Having invested near the start of the journey, they both made a killing on Versarien and have been gradually selling out over the last year for a number of reasons, including redemptions, relatively high liquidity compared to their other micro-cap holdings, but also just to bank some profits at a good price. It is believed they are both out, or very close, which will remove a huge drag on the share price. These two factors, coupled with the fact that a lot of over-excited private investors had gotten themselves in too deep (some on leverage), has meant that the share price has collapsed on the basis of no news rather than bad news. The reality is Versarien are an incredibly exciting company, led my a charismatic CEO and are generally thought to have the best quality graphene globally. They are collaborating with a huge number of multi-nationals such as AECOM, Tunghsu, Axia, Continental Tyres, Nike (This one is a very educated guess, not confirmed), are at the forefront of a new industrial revolution, have two government secondees working for them (Unprecedented for a firm of their size, Rolls Royce are the only other firm to have ever had a government secondee and they only have one) and with a little patience, I think it is almost certain that the shares will multi-bag from todays price. Because of all of this potential, even after the recent collapse in share price, they still operate on a P/S of 11 however. With that in mind I'd recommend anyone who is interested to take the time to read through all of the RNS's in the last couple of years, really familiarise yourself with the company and then if still interested, consider whether or not you would prefer to take the risk of making an investment now, or wait until the business model has been conclusively proven with a large major order (I strongly believe this is imminent) and likely pay 1.5-2 times the price you could get them for today. I guess a lot of that depends on your investing style and tolerance for risk but it is also worth noting that there is very strong support around the 60-70p mark so now really could be a particularly good time to start building a position. DYOR

Graham & FoolishBen - great replies and a lot to chew over. Many thanks.

1st Mar '19

https://total-market-solutions.com/2019/03/01/versarien-plc/

Took too long to chew over this one.
SP is up 15%. :(

Hi FoolishBen -
Thanks for the link. Very useful article, although I do not entirely buy Ricketts's explanation for the SP weakness in Jan & Feb. It has been a far steeper decline than others in the sector.
But it seems to be recovering well over the last two days.
Oh well, back to watching it for a good entry point.

Hi Ramridge

Yes totally agree with respects to Neill's explanation. I think the main point he chose not to highlight is the share price built on the expectation that the first major deal would have been agreed by now. It hasn't and as a consequence the lofty valuation, market turmoil, targeted shorting, over invested/leveraged PI's, micro-cap funds selling out and various other factors have all come together to create a rather dramatic slide in the share price. As mentioned earlier however, the deals will come (As an example, we are due an update on a large potential deal with Aecom by end Q1, following some ISO tests on a civil engineering product) and once they do I think there will be a lot more interest from more risk conscious investors as well as institutions who probably have it on their watchlist but would be unlikely to invest in something so blue sky until there are some solid revenue numbers to back it up. When you look at this list of companies they are collaborating with, across the various different industries and geographies and take that together with the fact that there is no doubt graphene can dramatically enhance a huge variety of products, I really think it would be quite astonishing if they cannot find some significant commercial success within the next year. That said I can see why you wouldn't want to buy after a 15% rise and I'm sure the market will throw up another attractive entry point in the not too distant future as it's been an incredibly volatile ride so far.

Ben

carmensfella

9th Apr '19

Just to mention that Neill Ricketts has accepted an invitation from Mello to appear on a specialist panel at Mello2019 in London on Friday 17th May which will be looking at the reasons why stocks are not valued correctly and do not seem to be the right price?

The panel will engage in serious discussion over a one hour session and include a well known City analyst, a broker, a financial PR, a highly respected investor and a fund manager. Two other stocks will be discussed and the CEO or board member from each company is taking part.

This will not be a light hearted session as the aim is to understand why certain stocks fluctuate wildly in price or never get anywhere near what a reasonable valuation should be if the brokers have their research correct ? It should be useful and informative. Mello is an event created by investors, run by investors and most certainly for investors. It is a ticket only event.

If you would like to come and meet and speak with Neill at the event and watch this panel session it will take place in the early afternoon of Friday 17th May at Mello2019 held in Chiswick, London W4 and further details here

Https://melloevents.com/upcomi...

If you want discounted tickets to attend then the best code to use is Stocko40 and you will get 40% off the one or two day prices

Zoiberg

14th May '19

Interesting article in today's Times on the use of graphene to strengthen asphalt. It's still in the experimental stage but indications are that it could increase the life of road surfaces by 2.5 times.

https://www.thetimes.co.uk/article/super-strong-graphene-to-tackle-pothole-plague-38mb6qfj8

15th May '19

Do you think that graphene will be available at a price point to be used in road filling? I thought it was a premium price product which made it be more likely to be used in more value added areas. No doubt Neil Ricketts out of VRS will have some views on that at Mello.I find it hard to weigh up the merits of the various producers in this area.

Versarien Part 3 - Graphene Competitors

Competitors

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MikeBrenner

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