Versarien Part 3 - Graphene Competitors

Saturday, Jan 27 2018 by
30

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

Part 3 - Graphene Competitors

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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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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Versarien plc is engaged in offering engineering solutions. The Company operates through three segments: Hard Wear Products, Graphene Products and Thermal Products. The Thermal Products segment develops, manufactures and supplies heat sinks and other products made from porous copper and aluminum. It manufactures thermal management solutions for industry sectors, including telecoms and broadcast, consumer electronics, microscopy, defense and aerospace, automotive transportation, medical thermal management and industrial lighting. The Hard Wear Products segment manufactures tungsten carbide hard wearing parts. It serves oil and gas, metrology, paper and packaging, metal cutting, spraying, tooling, textile and tobacco markets. The Graphene Products segment is engaged in developing applications for graphene based upon the technology for manufacturing graphene. The Graphene Products segment specializes in the supply, characterization and early-stage development of graphene products. more »

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28 Posts on this Thread show/hide all

nigelpm 28th Jan '18 1 of 28
5

Well done on the effort to post that amount of content. Much to be admired there.

The problem is though you've not once touched on market capitalisation and valuation.

Investing is all about the above. Without it you might as well put your money on a roulette wheel.

Also, those posters you note at the top of the post are some of the most angry and abusive people I've ever had the pleasure to read - and for ADVFN that is saying something!

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Axotyl 28th Jan '18 2 of 28
2

I agree with Nigelpm - there is much to be admired, in all 3 parts of this exceptional summary on Versarien et al

However, I suggest that Nigelpm takes a look at Financials (in Part 2), and realises, by reading all 3 Parts, that MC and valuation are not the primary factors applicable to judging a company like Versarien; certainly at its current stage.

Investing is not all about MC and valuation - you need the vision to see what's in the future, and many of us have got enough information to make an informed decision. Comparing Versarien to gambling on roulette is totally misleading for anyone who's followed ADVFN's boards and the current summary.

There were some abusive posters on ADVFN, which is the reason for the recent additional board, which can be moderated.

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MikeBrenner 28th Jan '18 3 of 28
1

Thanks Nigel, hope you found the research interesting.

On the valuation side, I happen to agree with you, Tim Kempster and Wshak that based on the Versarien interims and announced revenues and losses up to 30th September 2017 then their market cap of £160m today is overvalued. However since then we have seen some very material newsflow that indicates that Versarien has moved its graphene out of the lab and into purchase orders or real potential to scale up to serious orders: 

1. 31st October 2017 - Collaboration with Israel Aerospace Industries to supply and test Versarien's proprietary Nanene few layer graphene nano-platelets in aerospace composite structures (we know VRS have the 3D printing and carbon 

2. 6th November  Fund raising of £2.8 million, net of expenses, to increase Nanene production capacity by a factor of approximately ten and provide working capital to enable graphene related collaborations to be progressed. This means they can easily produce 352 KGs of Nanene per year with good scope for future production upside e.g. double shifts. Based on the current cost per gram of Nanene being £100 per gram that would be £35.4M, If at £25 per gram that would be £8.8m per annum revenue from Nanene sales (I believe the price will be in between). As its modular its easy to buy more machines and scale up production quickly so they can now meet most Nanene demand.

3. 17th November 2017 - Collaboration with global consumer goods company (likely Unilever as per research) with a purchase to incorporate Nanene into packaging polymer structures

4.  29th November 2017 -  Interim results where they announce the following

     a) Winning a competitive tender for all 4 areas by the Centre for Process Innovation to provide graphene and boron nitride and to fulfill a 1.2kg order 

     b) Confirmation that internal reviews indicate that Nanene quality complies with relevant provisions of new ISO standard (no other graphene players claim they can do this or have been as clearly certified by independent sources)

     c) Proof that once they have a "real" business that they can run it ok - grew revenues 167%

5. 4th December 2017 - Global US Chemicals Company and a Fortune 100 company (Dow Dupont), will use Versarien's proprietary Nanene fewlayer graphene nano-platelets, along with other 2D products manufactured by Versarien,on research, development and testing of compounded materials, with the objective of replacing incumbent additives across different chemical variants to improve material performance. Specifically, this partnership gives Versarien and its Partner the opportunity to evaluate and process samples for speciality packaging applications and barrier technology, as well as allowing both parties to better understand the future opportunities of further agreements. Of interest here is that not only does it seem to support the commercialisation of the Global consumer goods company, but its the first sign that VRS are commercialising their Cambridge Graphene Ink business

7. 8th January 2018 - Collaboration agreement with a global textiles and apparel manufacturer which will allow both companies to collaborate on the incorporation of graphene into fabrics and assess its suitability for inclusion in high performance sportswear. This is the first clear mention for the Cambridge Graphene Inkproducts that are now moving out of the lab into the commercial world.

8. 15th January 2018 - Planned JV in China with Jinan Province (LOI stage) 1) 100,000 sq ft manufacturing facility up by summer 2018 (again based on my research you would be looking at at least 100 machines and nearer 250 to fit into a space like that, with each one producing 352kg per annum) 2) establish a graphene valley in Jinan with VRS at the centre ... Chinese would invest £55m and cover all costs, Versarien would provide IP and expertise (no cash cost into JV) ... it now looks like a deal is going to be announced next week with Theresa May's visit to China.

Finally i would say that you either believe that the above is BS and Versarien (LON:VRS) is a fraud , or you can believe that the players above have done some research into the company, their partners the University of Manchester and University of Cambridge and Versarien's ability to deliver graphene of a high enough quality, in a commercially viable manner (amount they can provide and cost) that they believe

As a very experienced investor I don't need to tell you to suck eggs! (i've followed your posts from the early Motley Fool days), but its clear that there are some companies who have brighter futures than others, and as a result the share price and valuation grows based on expected future revenues. Whilst like you i would like to see what this looks like in real numbers, we are going to have to wait until July 2018 for their Final results to be announced (based on 2017 announcement, but hopefully earlier).

If i was to ask you what would be the valuation for a company like this, with the clear progress that they have made in taking the "wonder material" graphene out of the lab and into commercial collaborations with brands and partners, who was uniquely vertically integrated into the Universities of Manchester and Cambridge (2 of the most respected centres of global graphene research), as well as the scale up of their graphene manufacturing to meet demand, and potential for international manufacturing to meet serious demand in China going to IPO then what do you think the valuation would be? I would wager that it would be considerably higher especially for long term investors looking for exposure in this space.

What are your thoughts? What would you value it at today?

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nigelpm 28th Jan '18 4 of 28
3

In reply to post #305738

Thanks for the response.

You clearly buy into all that the company are saying post the interims - I don't based on Tim Kempster's discussion with Neill Ricketts on Twitter and some of the digging around I've been doing.

What would I value it at?

Anything from Zero to £25m right now.

I do however accept there's an outside chance it will be worth something close to its existing market capitalisation over time.

However, as an investment right now that's not a great shot.

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nigelpm 28th Jan '18 5 of 28

In reply to post #305733


Investing is not all about MC and valuation - you need the vision to see what's in the future, and many of us have got enough information to make an informed decision. Comparing Versarien to gambling on roulette is totally misleading for anyone who's followed ADVFN's boards and the current summary.


Anyone who thinks they can see into the future is seriously misled.

Investing for me is about earnings, balance sheets and cash flow.

I'll leave this debate here as it's clear I have a very different mentality when it comes to investing.

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Axotyl 28th Jan '18 6 of 28
1

"Investing for me is about earnings, balance sheets and cash flow"

An excellent approach, but others, including myself, on AIM, with this particular share, have different criteria. There aren't many opportunities to match this company, at this stage of its growth.

See you in a year or two?

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MikeBrenner 28th Jan '18 7 of 28

Thanks for the reply Nigel - can you share what in particular from your digging around and from Tim’s research that makes you think what the company is saying isn’t real or would affect the investment / valuation?

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nigelpm 28th Jan '18 8 of 28
5

In reply to post #305788

It's mainly based on the responses to Tim and Was from Neill Ricketts - he very rarely answers with a straight bat and when he does it doesn't come across well.

Also, R&D spend is a major concern. It was only £300k in accounts and they only capitalised a third of that - my simple question would be why when billions are being spent on Graphene research worldwide. Why are VRS going to nail it when no-one else has to date?

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