Flickers of Light - (VDTK)
Flickers of Light
Watching the market continues to provoke a combination of disbelief, frustration and self-doubt. Relief that the coronavirus epidemic appears to be easing is countered by dismay at unsurprising news of further economic damage each day. Yet the stock market continues to fare relatively well, and betting against the market is often folly. Is it foolish to sit on the sidelines, watch and wait?
Stubborn it may be, but it still appears right to keep close to your cash. There has been good money to be made by those brave enough to back some of the big boys, but a tight stop loss remains the best insurance policy for any who have been so smart. Best to take profits quickly should cracks start to appear.
It seems remarkable that so many should be so bullish when gains are only taking the winning stocks (sure, there are plenty of losers as well) back up towards what were record levels before the virus gained hold. And those record levels looked unsustainable by normal standards, let alone with the calamity which has come crashing in. The stock market appears to be on an altogether artificial life support, as if the big players have decided they are going to push it up and around and ignore the abyss ahead.
All of which makes an incongruous opening to a short report drawing renewed attention to Verditek (VDTK), a tiny, loss-making company hoping to make it big in the business of solar panels. This, as must be emphasized at all points, is one of those intriguing little gambles which is hard to resist for those, like me, who love a good story, one which could see a tiddler take off if all goes well. Through the years, there have been a few such winners here, but – be warned if you need to be – several of them have flared bright, only to crash and burn in the end. So should you fancy this one, stay near the exit, stop loss at the ready – though the current low price leaves little room to scramble out should things go wrong.
So understand, again, that this is a high risk play, which has required a series of modest injections of capital to keep it alive after it came to market prematurely and struggled. Should it succeed, however, the rewards should more than make up for a few frayed nerves along the way.
Currently, Verditek makes solar panel s which are flexible and one tenth of the weight of conventional panels, a crucial advantage. There is a factory in Italy which started production a while back, stopped for a short spell, and is now in production again. In September, it was said that break-even would come at with orders for 6 to 7MW of panels, and that there were orders for 8MW.
Good stuff, except that the orders were from Nigeria, and there has been no mention of them for months. The contracts appear still to be in place, but it is not clear what is behind what appears to be a delay in the business.
In the meantime, it looks as if most of the production so far has gone out for trials with potential customers. These cover a wide range of applications. In the past few days there has been news of a couple of agreements on the web site at https://verditek.com/news-and-views/posts#posts-sectionhttps://verditek.com/news-and-views/posts#posts-section One is for a trial of panels on a sort of pedal-powered tuk-tuk style delivery vehicle, and the other is to install panels (curved) on the roof of eco-type buildings. Both look useful projects, but hardly company makers.
An update earlier this week also mentioned an agreement for a Portuguese company to develop a light weight panel factory based on Verditek technology. This appears to involve the company in little or no capital spend, and could fill a gap in the Portuguese market where solar panels are very popular and which is not currently being filled by Chinese companies.
There is also news of a paid trail with a Dutch company which has developed a solar on top product which helps lower fuel consumption and brings sustainable energy for heavy goods vehicles. There are real benefits for fleet owners who can use solar panels to power climate controlled cargoes without the vehicle engine on. Other major uses on trial involve harnessing the lightweight panels for military uses, hooking them over tents for solar power, plus use in commercial real estate and work with a global giant for remote and off-grid telecommunications towers.
There is a wide variety of opportunities open to the company, and hopes that widely experienced new commercial director Rob Richards can hit the ground running and secure substantial orders fairly quickly. He came in a few weeks after the latest fund-raising round - £500,000 at 2.5p, a small premium to the then 2.2p share price.
The potential market for lightweight solar panels is substantial and there are signs within the company that there could be significant progress over the next few months.
And there is one massively more exciting development in prospect. For some time Verditek has been working with a company out of the University of Cambridge called Paragraf. Graphene has been the new wonder material for about a decade, but development has been held back by the difficulty of producing it in anything but small quantities. Thin, transparent, flexible and mechanically strong, graphene has remarkable conductivity, making it ideal material for electronic surfaces.
Paragraf and Verditek have developed what is claimed to be the world’s first working graphene integrated solar photo-voltaic cell, with graphene on the top and bottom of the wafer. This has remarkable possibilities, harnessing access to sunlight to generate energy wherever required, converting more of the energy received into electricity. The aim is to raise conversion from about 21-23% of the energy received into more than 25% electricity, allowing the cells to be used in space and for consumer products like self-charging laptops. Now in stage two development, this is some way away yet, but offers an enormously exciting upside if it succeeds.
Sitting on top of this as chairman is Lord David ‘Two Brains’ Willetts, not one of the scientists at work but an eminently respectable and informed character. He lends the company a degree of credibility which might otherwise be lacking.
It might appear odd to continue recommending this company, even as a wild speculation, in a report which reflects general market misgivings. But such a company scarcely reflects the overall market mood, and the depressed 2.6p price is more the result of lingering disappointment among early supporters. That could be about to change in the months ahead. If it does, the re-rating could be spectacular.
I have a holding in Verditek.
PS. There are earlier reports on Verditek. Put VDTK into the panel at bottom left of the front page.