Readers may remember a company we discussed a few years ago in the field of Graphene production: Versarien. Lucky investors managed to get the share at entry for 13p only to sell out at circa 150p. Versarien was a high technology play that engaged university participation at an early stage, very similar to the company Ilika (IKA).
With the FTSE 100 climbing again above the 7000-level, there is the possibility of a possible large correction based on the outcomes of Brexit. With this in mind, we thought we would draw attention to opportunities on the AIM market. Ilika Technologies (IKA.L) has been identified for its capital growth potential. Readers may remember a company we discussed a few years ago in the field of Graphene production: Versarien.
Lucky investors managed to get the share at entry for 13p only to sell out at circa 150p. Versarien was a high technology play that engaged university participation at an early stage, very similar to the company Ilika (IKA). IKA has been on the AIM for nearly 9 years and like Versarien, it has not made much progress share price wise. The company has been funded largely by grants and research funding provided by outside parties. IKA has a number of potential deals in the pipeline, which could suddenly see the small technology play spring into
action. We purchased IKA for clients at the beginning of this year, only to experience a near 100% rise in the share price from entry at circa 16p, to nearly 30p – they currently have pulled back from this level and are around 24p a share.
As it can be seen from graph above, the company has traded much higher in the past and one could argue was not much of a better company than it is today in its current form, now let’s explore those reasons why. IKA was founded in 2004 and its IPO date was 2010 with a 5.2million raise, an enlarged market cap of £18 million, and an IPO price of 51p for not so lucky institutional investors. If we fast forward to 2019, we can see that the company has a market cap of circa 24million and a share price of 24p, so what has developed in 9 years that could be about to pay off now? We shall investigate.
The AIM market is fraught with disasters, no more so than in oil and mining, and coming in a close second, technology plays. Tech is an expensive thing to get right, and you need the right technology, team and funding to come together to make things work. Other factors also come into play, like government policies which at present stand to benefit IKA.
The main focus is solid state battery technology, but there are other potential markets for energy materials and aerospace alloys technology. The strategy is to secure an upfront licence fee from a major company for a specific use for a technology and then generate royalties based on a percentage of volumes shipped. The technology would be licenced for multiple applications.
The company have developed a type of lithium-ion battery, which, instead of using the usual liquid or polymer electrolyte, uses a ceramic ion conductor. The company looks to use its batteries to power on the small scale, medical devices, the IOT (the internet of things) which is a massive growth market and finally on the larger end of the spectrum the Goliath project, which is dealing with EV (electric vehicle) battery technology. The batteries go under the name of Stereax.
Ilika’s Solid state batteries have several benefits over currently available lithium-ion batteries:
The company holds a number of patents involved in the field of solid-state battery production but more interestingly some held in conjunction with Toyota Motors whom they have been working with since 2008. Toyota have invested £4 million directly into this research. Ilika has also filed 9 patents in the period 2008-13 to facilitate further advances in EV through the creation of
new battery materials and compositions. These are being integrated into batteries for future generations of Toyota’s hybrid vehicles, also offering very significant safety benefits over liquid electrolyte batteries. Reducing catalyst materials costs is a key driver in delivering Toyota’s vision for fuel cell hybrid vehicle roll-out. Mr Taniguchi (Toyota) states, “Ilika’s fuel cell catalyst formulation is key to Toyota’s strategy for cost reduction”, while according to Mr Okajima (Project Manager, Toyota’s Frontiers & Advanced Engineering Strategy Department, R&D Management Centre, Japan), “Ilika’s high through-put techniques are essential to overcome some of the technological barriers we face in the development of leading-edge technologies”.
The company has recently had very positive RNS updates regarding working with the likes of McLaren Motor company to help integrate EV battery technology and they have recently been awarded £4.2 million in grants winning the Faraday battery challenge. All the above updates and the large number of new distributor agreements signed towards the end of 2018, make the company look well placed in order to lead to some very interesting developments in 2019.
Being an AIM company, the volatility always needs to kept into consideration and the timeframes mentioned by the company may be subject to delays and further funding requirements, all of which can give rise to large negative moves in the share price.Fuel cell companies in the past, such as Intelligent Energy, have been a disaster. At one point, IEH was worth £1billion only to fall from its 350p IPO price in 2014 down to 2p before going bust in 2018. This is by no means the only battery company out there and they are currently operating in one of the most
competitive areas in the world in terms of technological innovation and development. There are a lot of competitors, some with very deep pockets, and it will be interesting to see how IKAs technology fares against what else is out there.
This company has one thing in common with Versarien and Optibotix, also highlighted by London Stone Securities, they all have very good technology but no real revenue figures. The market likes revenue, and once these companies start to post positive revenue figures and glimpses of signs of profitability, valuations will change. So, whilst we sit out and try to avoid the effects of climate geo-engineering, media induced rioting from a potential no-deal Brexit or a fake asteroid attack in 2019, we can look forward to some of these companies finally
showing their true colours.
We hope you enjoyed this free report by London Stone Secruities, if you would like more information on Ilika Technologies or any other AIM share we are working on then feel free to get in touch on 0203 697 1700 or email us at firstname.lastname@example.org
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