Fun, Fun, Fun - (NANO)
Fun, Fun, Fun
It has been a frantic couple of weeks for stocks we follow. Step back, though, and it is clear that there has been a major change in outlook at three old friends. As ever, nothing can be guaranteed, but quite suddenly, all three look much more appealing. Each could generate substantial gains over the next twelve months, all being well. Each ranks as a speculation, but now a much more attractive speculation.
They are Nanoco (NANO), Eden Research (EDEN), and DJI (DJI). There have been extensive reports within the last two weeks on all three. They are worth re-reading. With the exception of DJI, nothing which follows will be new to those who have read those reports carefully. But it seemed worth setting out, in simple fashion, the main reasons for the new temptation - and especially in the case of Nanoco, doing it so subscribers could be ready when the actions starts again on Monday morning.
The Dow factory is at last producing Nano's cadmium free quantum dots (CFQDs).
Dow has started shipping CFQDs to Samsung, which is pushing hard for them. Samsung is planning a major push into TVs using CFQDs, with Dow/Nano as a dual source.
Dow has a contract from LG to supply Nano's CFQDs.
The Dow contract with Nano runs until 2028 and while royalties are reduced, they are still in double figures.
Nano is able to improve productivity significantly at the Runcorn factory at little extra cost.
Nano is talking about supplying a variety of TV manufacturers. One well-known name is looking to take CFQDs from Runcorn, and could agree to build a factory making Nano's CFQDs for its own use and for sale to others.
Nano has cash enough for two years. It expects lower revenues for the current year (to end July), but hopes for higher revenues thereafter.
Nano terminated Dow's exclusive right to make Nano CFQDs for display because it looked as if Dow would not make early sales targets.
There is a possibility that Nano could sign a deal with the new customer/manufacturer before July 31, and that modest initial royalties on the first CFQD sales could be recognised by that date.
Major shareholder Henderson has bought one million more shares recently, going up to 19.35%. Entrepreneur investor Richard Griffiths, who sold some Nano a while back, recently added nearly 7m shares and with CFDs now has more than 8.6%.
Nanoco is still the only company capable of producing CADMIUM FREE quantum dots in high volume just as demand for quantum dots is exploding and dots containing cadmium are being phased out or outlawed over much of the globe.
Eden Research (11.25p)
Eden has just raised £2.6m gross at 10.25p, covering working capital of about £1m for at least two years.
The cash came from several institutions, led by Livingbridge, which manages some £1.5bn, much of it across smaller companies.
Livingbridge invested £2m after several months of detailed due diligence, including visiting Eden customers in Europe, and will put up a non executive director, adding City experience to the Eden board.
The investment should lay to rest any question marks over past transactions, and gives Eden a second significant respected City investor alongside Artemis.
The first major product - 3AEY - using Eden intellectual property has been authorised for use in crucial European countries. It is being marketed by associates of major global giant Sumitomo and others. Deliveries have commenced, and there should be modest milestone payments followed by royalties as sales develop. It is also being sold in Kenya.
Potential additional uses for 3AEY are being developed in several markets and different geographical areas.
A nematicide has been under evaluation by a subsidiary of US giant Eastman, with an option which has just expired. There are negotiations over the next move, and if an Eastman deal does not come through, others are thought to be ready to move ahead.
Eden's unique technology combination, using all natural terpenes and controlled release via encapsulation could supply natural answers to a broad range of challenges in agriculture, animal and human hygiene and much else.
The new funding gives Eden the opportunity to develop the technology further down the value line, and eases financial pressures which have been a perpetual drag on progress.
DJI International (59.5p)
After a year in limbo as the Chinese government moved to clean up the industry by suspending all lottery sales, DJI got back into the game with the launch of a mobile lottery sales app in conjunction with part of Shandong Province.
This was followed quickly by significant new contracts for lottery services with part of Heilongjiang Province.
While the full online lottery is not yet back, these contracts cover much of the lost ground, and could generate substantial sales.
There have been extensive talks with a variety of government sources and major companies operating in China, and more deals look sure to follow.
Prior to the clean-up move, illegal lottery sales vastly exceeded legal ones. DJI is operating with established and respected partners, and the elimination of illegal operators is likely to channel massive demand towards legal sites.
DJI's technical skills in operating lotteries and online sales are potentially enormously valuable and must have great appeal to major Western players seeking a way into the Chinese market.
There is an explosion of interest in football and allied gaming in China, and DJI is exploiting it well through links with Arsenal and Manchester City.
DJI is planning a Nasdaq listing in the USA this summer, and could attract keen interest.
The news flow, with rumours of substantial new partners, ought to be good through the year.
All three - Nanoco, Eden, and DJI, should be considered speculative. All have had sharp share price setbacks, but recent developments appear to have changed prospects dramatically for the better.
MW note. I have a holding in all three companies.