Nanoco is a global leader in the development and manufacture of cadmium-free quantum dots and other nanomaterials. Its platform includes c 700 patents and specialist manufacturing lines. Focus applications are advanced electronics, displays, lighting and bio-imaging.
Nanoco’s announcement that its project with the major US customer will not continue when the current contract expires in December 2019 is clearly a severe setback and we have therefore cut our FY20 estimates substantially. We note though that the customer’s decision relates to a change in strategy rather than issues with the performance of Nanoco’s materials or services. The company has a strong IP base and state-of-the-art manufacturing facility with an estimated 12 months of cash to explore new commercial options including with its US customer. Following the share price drop on 21 June, the £20m market capitalisation appears to assign little value to these assets.
The decision not to extend the current contract means that Nanoco’s major US client will not progress to volume production in the foreseeable future. Industry newsflow suggests the client may have opted for an alternative architecture for the component potentially deploying quantum dots. Nanoco is exploring alternative use cases for the technology with a number of customers and supply chain partners, including the major US customer, and continues to work with other customers on deployment of quantum dots in other applications including display and medical imaging.