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Little by Little - (VDTK)
24/9/2020
(119264)
Little by Little
Sad to see the Verditek (VDTK) share price steadily on the slide, undermined by incessant, malicious comment. Hopefully nervous subscribers exercised a stop loss and stepped away a while back, while others who remain are reconciled to playing a more patient game, waiting as the orders build up.
The basic business looks attractive, supplemented by other exciting medium to long term ventures. News today brings a modest cheer for the developing solar panel operation with the first order from the mining sector in Australia. This comes from a modest unlisted company called InterGroup Mining which has made a number of potentially highly promising gold discoveries and appears to be on the brink of substantial expansion.
The order is for 75kW of Verditek’s lightweight solar panels at the exploration camp, where they will be used as part of a diesel-solar hybrid system, saving costs on using and transporting fuel and conforming to the Australian Government’s wish to back greener business. The unit is expected to be shipped in December and the first stage payment has been received.
InterGroup managing director Steve White suggests that as the mining plan is developed and power needs ramp up, there is scope to raise the take-up from Verditek to between 1.5 to 2MW over the next 12 months. Earlier this month Verditek highlighted that one mining consultancy partner with a client base controlling some 4,000 individual mines had said there was scope for all mines to switch to solar, creating a significant revenue opportunity.
This helps illustrate that the potential market for solar panel in Australia alone is vast, encouraged by a government reluctant to see an invasion by Chinese products and ready to subsidise setting up manufacturing plants locally – a possible medium term objective for Verditek.
The 18 company salesmen are settling in and presenting to a variety of possible customers across the world, but it takes time for proper evaluation. A number of presentations are being pursued.
There have already been other smaller orders, and in the weeks ahead Verditek will be working to secure one or two larger deals which could help the push towards break-even this year.
The company is effectively under new management and starting a fresh sales push under Rob Richards as chief executive. The initial share surge has faded and with it the opportunity to raise additional cash to push more quickly into building more manufacturing plants. Progress might prove a touch slower than first hoped, but sales growth as industry switches from diesel to solar power is gathering momentum, and there are substantial opportunities.
The prospect of more news in the months ahead on the links between Verditek’s solar and the excitement of Paragraf’s advances in using graphene remains an exciting possibility. That could propel the company into another league.
Those who moved into Verditek earlier this year at prices from 2.5p and up have had a giddy ride as it touched 18p. One or two skeletons have been dragged out of the cupboard and disposed of and the basic business is making good progress behind the speculative storm which has tossed the shares around. If you are holding on, sit tight. There could be a great deal more to come.
At 8.125p, hit today by selling from gamblers who had been hoping for news of a bigger order, the company is capitalised at £24m – still early days for what remains a speculative but appealing growth story. In fairness, however, it is sensible to warn that recent obsessive online thuggery seeking to batter the share price is unlikely to let up.
I have a holding in Verditek.
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