Paradigm Capital analyst J. Marvin Wolff dramatically raised expectations for Canadian graphene company NanoXplore (NanoXplore Stock Quote, Chart, News, Analysts, Financials TSXV: GRA), increasing its target price by 30.9%, from $ 10.50 / share to $ 13.75 / share by reiterating its long position in its latest report, generating a potential return on investment of 172%, dividend included.
The self-proclaimed world leader in the production of graphene and the commercialization of graphene in the verticals of plastics and polymers, NanoXplore capitalized on the discovery of the carbon-based compound in 2004 to carve out a niche in the market, with new product development programs in the automotive, battery, thermoplastic compounds and electronics verticals are also on the horizon, with six patent families expanding between 2035 and 2041. With its potential and its important adaptability, Wolff is extremely high on the capabilities of NanoXplore.
“Due to its recent discovery, graphene has very few end-use markets,” he said. “NanoXplore is aggressively developing end-use markets using graphene as a performance enhancing agent for a variety of different plastics with many different end products. “
Paradigm Capital predicts exponential revenue growth over the next two years, with projections rising from an estimated revenue of $ 71.6 million in 2021 to $ 179.7 million in 2022 and then again to $ 241.5 million by 2023, with jumps attributed to NanoXplore to find ways to reduce graphene production. costs, thus increasing the margin assumption from $ 5.00 / kg to $ 7.00 / kg.
From an EBITDA perspective, Paradigm Capital predicts that NanoXplore will post positive numbers by 2022, going from – $ 4.2 million this year to $ 48.5 million by 2022, then to $ 71.4 million by 2023. Earnings per share is also expected to generate a return. by 2022, going from -a – $ 0.07 / share expected in 2021 to $ 0.016 / share in 2022, then to $ 0.27 / share by 2023.
NanoXplore has secured major contracts for its graphene-based products in recent months, including with Canadian auto parts maker Martinrea International Inc., Tennessee-based Techmer PM LLC, and Brazilian steel producer Gerdau Graphene LTDA, the latter needing tens of thousands of tonnes of graphene in its contract, which means that NanoXplore will have to expand well beyond its capacity of 4,000 tpa at its factories in North Carolina and Montreal in order to meet demand. customer demand.
However, according to Wolff, the management of NanoXplore eventually expects to win contracts larger than the Gerdau deal.
“We understand that there are a handful of potential customers who would need similar large volumes,” he said. “While it is difficult to determine who might be such customers, we do know that NanoXplore has developed improved graphene solutions with customers in several potential high-use verticals, including construction, piping, roofing and construction. automobile. ”
In addition, NanoXplore’s business model is not limited to the production and sale of graphene, with revenue streams also occurring in battery materials including graphene and Si anodes, as well as battery production. Li-ion via VoltaXplore Inc., a joint venture between NanoXplore and Martinrea International aims to serve the electric vehicle transportation and networked storage markets, with a demonstration plant currently in production, and a goal of being operational by here. early 2022.
“Graphene increases the charging speed and capacity of batteries while improving safety by allowing batteries to operate at lower temperatures,” said Dr. Soroush Nazarpour, President and CEO of NanoXplore. “VoltaXplore will benefit from the use of NanoXplore’s graphene-enhanced silicon anode formulation and manufacture cylindrical Li-ion cells. One of the keys to the future of an electric vehicle is significantly improving batteries, and we believe we can be part of the solution, both at VoltaXplore and as a graphene supplier at NanoXplore. We believe that the successful development of improved graphene batteries will result in the need for high volumes of graphene powder. “
Ultimately, Wolff notes, the increased growth of the business will depend on its expansion plans, which include six months for equipment and an additional six months for commissioning, although that window may also decrease over time.
“We maintain our view that the assessment at present is best based on a four modulus scenario, 16,000 tonnes of graphene, with a full year of production corresponding to FY 24 at this level,” a- he declared. “Obviously, as a better picture emerges of the tonnage required by customers, the outlook can be changed easily. “
NanoXplore shares today closed 3.36% lower at $ 4.60.