Considering the uniqueness of its properties, companies commercialising graphene have, for the most part, failed to live up to the hype surrounding the material. However, now that the hype has moved on and the companies have had more time to develop their proposition, could the handful of AIM-listed graphene companies be considered incredibly cheap and worth further investigation?
What makes graphene so special?
First discovered and produced in 2004, graphene combines a unique set of properties: the strongest material ever developed (200 times stronger than steel, tougher than diamond and thinner than a flea’s hair), but also the world’s thinnest material, flexible, transparent, and able to conduct heat and electricity far more efficiently than any other substance on Earth. Such is its uniqueness, it is expected to be responsible for innovation across a huge range of industries, including electronics, energy generation, medicine, sensors, batteries, and conductors.
How have graphene shares performed?
Soaring seemingly overnight when graphene’s potential was first communicated by the media, the share price of companies working to commercialise this miracle substance have fallen just as quickly. Applied Graphene Materials PLC (AGM), for example, when first listing on AIM in late 2013, was valued at around 450p per share, but is now only valued at 9.12p at the time of writing.
Nevertheless, in the history of new materials graphene certainly won’t be the first new substance hotly tipped for great things but to take a long time to deliver. Take, for example, silicon, which was first discovered in the early 19th century, but failed to find any real commercial application until the birth of the semiconductor industry more than a century later. In addition, aluminium was also hailed as a wonder substance when first discovered in the 1820s, but it wasn’t until after the First World War that aluminium found a true business case with its deployment in the production of aircraft.
In essence, any new discovery typically faces formidable challenges that inevitably slows down its progress, such as identifying the commercial application whereby it is most effective, ensuring it is conspicuously cheaper or better than the products already available, and ensuring that it is conducive to being manufactured on a commercial scale.
What graphene investment opportunities exist on AIM?
As things currently stand, there are four graphene companies currently listed on the FTSE AIM Market:
Applied Graphene Materials (AGM): In terms of commercial strategy, the focus for AGM is on collaboration with commercial partners to accelerate the adoption of graphene, targeting three core target market sectors: polymers and composites, paints and coatings, and functional fluids. Towards this goal, the company were pleased to announce in April 2020, AGM’s Genable dispersion range, easy-to-use graphene additives for the coating industry, had extensively developed and tested the effectiveness of AGM’s graphene coating applications which is key to its successful early adoption. The company feels confident with the progress made throughout the year, with several product launches which are now available to retail as well as industrial consumers, resulting in an overall uplift in revenue in its H1 2020 results.
Directa Plus Ltd (DCTA): Based in Italy, DCTA has recently secured several textile-related deals incorporating their G+ branded graphene compound – most notably the launch of a cycling jersey with Oakley and Bioracer. By being treated with G+, this jersey distributes heat generated by the body in cold conditions and releases it when needed in warmer weather, meaning cyclists use less energy to regulate body temperature. Along with textiles, the company also has some sort of a grip on the tyre market, supplying its graphene compound to bicycle tyre maker, Vittoria, as well as automotive re-tread company, Marangoni. They have strengthened their environmental division through an acquisition of a 51% stake in Setcar, enabling them the ability to supply environmental services to the oil and gas industry.
Haydale Graphene Industries Ltd (HAYD): Describing themselves as a global technology solutions company passionate about creating the next generation of advanced materials, Haydale has had quite a tough 12 months. After announcing in their interim results on February 2020, the company has been adversely affected by both the current economic landscape and internal factors resulting in a significant reduction in revenue by a 17% compared to H1 2019. The company experienced teething issues due to disappointing sales figures and slowdown in demand from the aerospace industry. This has lead the group to undertake important restructuring and cost-control measures including the closing of a loss-making manufacturing facility in Taiwan. The outlook for 2020 doesn’t look positive in terms of recuperating from this shortfall of sales for the full year, however, the board claims to remain optimist to be able to deliver long-term results for the Group via a strong pipeline of profitable opportunities.
Versarian PLC (VRS): VRS is an advanced engineering materials group for blue-chip companies across its five subsidiaries operating under two divisions: thermal and hard wear products, as well as graphene and plastics. In terms of graphene, the company has managed to secure several significant collaborations, including with a global apparel manufacturer, a world-leading aerospace group, a subsidiary of one of the world’s largest construction and engineering contractors, a major tyre producer, and a global consumer goods company.
Cancellation of shares for Graphene NanoChem
Up until 2018, there was actually a fifth graphene company listed on AIM called Graphene NanoChem (GRPH). Shares for this company were cancelled, though, in March 2018 following the resignation of its nominated adviser and broker, Panmure Gordon, and failure to find a replacement within the month provided under AIM rules.
However, when announcing their cancellation, the company were pleased to report that progress had been made in advancing its proposed acquisition of modular construction company, CG Tekbuild. If completed, Graphene NanoChem believe that this acquisition will be transformational for the company and will look to undertake an initial public offering to relist on the AIM market.
*For a list of all other producers and distributors of chemicals and chemical products, please go to this page dedicated to all AIM-listed companies classified under Chemicals.