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"Nanonano , is it unreasonable for a company like Apple to demand that "millions of sensors" are tested to understand performance and failure rate as part of their validation process"
Not about reason, it's just not necessary.
Perhaps, perhaps not !
What's the weather forecast tomorrow ?
Perhaps your understanding is correct Bonzo and is just a bit further down the development path than my take, however I think in both instances it likely means there is not a device [e.g. AVP] on sale currently as the technology is still being assessed/developed for device integration.
We don't know if any device company has bought any sensors from STM as yet. In fact it's entirely feasible that STM are supplying samples FOC.
If we are to believe guidance, then this development cycle to adoption will attract more interest from more companies ergo more sales/FOC samples and perhaps that's where the growth will come from short term.
Commercially I'd not be surprised if Nanoco are taking some 'risk on' themselves and supplying STM on a malus basis during the development phase but with a bonus contract model both can profit from when the sensors go into volume commercial production.
NGR
My understanding is Nanocos materials are going into STM sensors which are now in production. Those sensors can be bought by device manufacturers who can now start developing devices using those sensors. So a new round of product/device development for (unknown) company/ies to go through. Suggests orders this year will remain very small. With any devices using the new STM sensors unlikely to go on sale much before 2025. And those probably niche products.
Nonetheless, once published figures for Nanoco show it is nearing breakeven interest in their story is likely to pick up. With some unforeseeable trigger likely to prompt a surge at some point. Perhaps buying by a tech investment trust?
Would you delay a device until 2028 for 'non-toxic' reasons when you can launch in 25/26 otherwise?
Perhaps Apple would if they thought no one else would be so unscrupulous as to launch a 'toxic' array sooner....
I can only surmise that interim growth is coming from the STM supply agreement of Gen 1 products through 24 and ramping up through 25.
He did say they could end up in (20--50?) different applications so maybe something else is coming in advance of mass market mobile adoption.
Would a customer be adopting gen 1 materials now for an end 2025 product launch when Nanoco and it seems others are advancing gen 2 non toxic alternatives already.
Take your points on the slides but it doesn’t leave us much the wiser on how the company is going to see a build up of revenues and cash flow breakeven in 2025.
Opportunity to ask questions next week ..but questions need to be submitted today i believe.
They managed to stir well clear on the first commercial adoption today but did say they expect more low volume orders this financial year.
But back to Cavendish who are still forecasting revenues of £8.4m for the year that does not factor in anything above the Samsung and r&d programmes.
Nanonano , is it unreasonable for a company like Apple to demand that "millions of sensors" are tested to understand performance and failure rate as part of their validation process given the end device and reputational implications if there was for example a subsequent high failure rate? Perhaps the sensors can be tested on a wafer basis.....
If you look at slide 12 the 2 materials in commercial production (1 NIR 1 SWIR) at the bottom of the chart have a purple arrow against them which indicates they are “moving to a new phase”. I take that to mean it’s not going into a device at this time.
Frankly I don’t understand why the company is remaining opaque on this. My interpretation now is only now after validation are we providing materials so the downstream supply chain can enter their product development phase (ie CMOS sensors) to subsequently provide to the device company for further validation. Presumably this will follow the same processes to be ready to scale up as we approach a device launch in the back of 25 for mass market adoption in 2026. It’s likely however that beta versions have already been supplied.
As far as Nanoco are concerned, they are in commercial production.
However the sensors they might be in are not themselves in commercial production. Yet.
Slide 12
PbS (Gen1) 2 materials (one NIR one SWIR) in commercial production (from Nanoco perspective) H1 FY24 for low volume application (possibly testing/development)
InAs (Gen 2) 3 materials being optimised over 2 years for two customers with different requirements- target production H1 FY28 (possibly sooner with FAB)
Footnote- potential mass market mobile phone adoption of SWIR in 2026.
BT of the opinion materials are not in a product that is on sale today.
It’s a very strange situation to be in ..one must presume the company knows approximately what the gen 1 materials were developed for if there was a specific first use in mind..as the spec would have given some big clues on functionality. Would STM have developed without an initial first use on a speculative basis..it always was put across that there was an underlying customer when they talked about validation. Certainly tricky trying to convince the market they are building revenues up to a cash breakeven point in 2025 with zero evidence of the market they are addressing or even how much material they have sold in the first commercial order.
The fact they wont even open on the size of the order is strange…how can that be confidential ?? It could be very small though which aligns with yesterdays results.
Gen 2 won’t be ready for scale up until 2026 which is after the supposed launch of SWIR enabled mobiles in 2026.
In my opinion Gen 1 materials are only just being supplied for early stage development of the end sensor modules and the volumes of materials are low initially (as guided). They ramp up through 24 and to a break even level in ‘25.
(Gen 2 cannot be contributing earlier than’26 when it’s only just going to be ready for scaling up)
Gen 1 will be ready for production in the hundreds of millions of devices in 2026 in mass market mobiles potentially Apple and others. In my view.
Mobiles in 2026 does not justify materials for millions of sensors in 2023-on, also remember that was delayed by a year. What was the earlier statement from the company about the commercial order- first use of its dots in a commercial product wasn't it?
But i thought we had been clearly guided to mass adoption was very much a gen 2 materials thing and we got the timescales on those with both parties today.
Would they be buying gen 1 materials to go in mobiles now?
Mobiles in 2026…..
I’d rather we’d committed to paying a dividend over the next 3yrs by which time we may have some orders to sustain it. To me, cash in the bank for a firm like Nano who can’t invest it in the business for a reasonable return is effectively valueless.
"Normally we are told when a product has launched"
Didn't hear him say that, I did hear him say that normally companies tend to tell you (e.g. the wider market rather than Nanoco themselves) when their product contains a certain technology. He also reiterated that they have no idea who the end user and application is.
Apple don't tend to be too forthcoming about the tech in their devices, and they certainly wouldn't want it too public that the sensors are using lead-based materials, no matter how minute the quantities. We do know they were still exploring Nanoco's heatwave dots post-June 2019, which of course doesn't mean they subsequently found their way into a device.
If it isn't the AVP, what is the most likely end use?
Ha.. “to 13p cash per share..£23m divided by 200m shares”
That was of course £26m the cash the company will have pre the £3m buyback by 200m shares!
Ah ..logic hey.
Was it logical the shares were trading at the cash level for months and even a discount ahead of announcing the actual mechanism for distribution? We have the same underlying business left owned by the remaining shares outstanding so that concentrates ownership sure ..but it does remove the backstop of 18p+cash per share which has been the basis of valuation for much of the past year and takes that figure down to 13p cash per share..£23m divided by 200m shares..thats math! Ahead of the share buy back that is which we don’t know when that will start ..but again if the buy shares at a premium to 13P then it dilutes the cash per share further.
Has the distribution largely stopped people selling as they want to tender and need to hold the full position to entitle them to sell 38.5% or more?? Has the tender encouraged some buyers who think great we can buy shares at 20-21p and sell them at 24p? It seems it might possibly encouraged by a number on here and elsewhere saying they wont tender.
That kind of short term money will be hoping to jump out of the balance i guess ? At what level? Down to where to make a turn? And as much as who will sell…who will be buying after the tender is done?
Personally i think the risk reward of holding a company at 19p with 18p cash backing is better than 19p with 13p cash backing irrespective of the concentration in the underlying business that has been apparently illogically valued at next to nothing for months.
As you say we will know after the 9th April. But many private investors will only be able to watch if they have tendered their holdings as the corporate action is extended and the funds not paid out until the 25th..maybe another reason why some are selling now?
Btw the 17p idea is just a reasoned guess and quite generous relative to the cash backing and average EV we have seen , so they could of course trade lower …or higher! But without actually thinking about the facts it must be difficult to have a clue.
Also why would they sell below the tender price after. You are not logical. Like Gindog said and got shouted down for not agreeing with you. The market will adjust the price according to supply and demand if no sellers below 24p then the price will rise.
It helps in these situations i promise you.
Lets see what the price becomes after tender, unlike you I don't try and predict where it will be. You like your maths.
Quick one for bolshy
“one thing i don't get at the moment is people are selling below 24 pence seems strange.”
Well maybe just maybe they figure the shares will adjust post the tender to let’s say the 17p level .
Now they can sell 38.5% maybe a bit more at 24p . Eg .let’s say they hold 100k shares to keep it simple.lets say they sell 45% at 24p =£10800,but are left with 55000 at 17P worth £9350 immediately after the tender.that would add up to £20150 or 20.15p equivalent.
Or they sell all of them how at 22p getting £22000.
A few variables there of course but hope it help you understand why some might choose to sell now.i know its complicated this adjustment business.
Nanonano; because he prefaced it with "normally we are told when a product has launched"
AVP HAS (undescore) launched and they have not been told. Of course there is scope for in AVP but that means not only have they not been told, but that the order in November would have been processed, deliverered, then processed on receipt to be integrated into a module(s) before being put in the sensor module before going into the device [AVP] that was launching on the same timeframe. In my view that's not at all likely.
He followed up saying the indication is SWIR adoption in mobiles in 2026. The usual process is gradual build of low volume orders towards mass production. This for me aligns with Gen 1 gradual increase in supply through '24 to BE in FY25 and adoption in mobiles in the hundreds of millions of units in 2026.