Oxonica Share Discussion Threads

[cootuk] 18/8/2006 05:03

A piece about Octel and profit margins.



"But profits for specialty chemicals are not nearly so good as for TEL. Gross margins in 2005 were 34% for fuel specialties and just 13% for performance chemicals."

Say Envirox has a profit margin of 15-25% then the $12m order is worth at least £1m-£1.5m in profit - should help the cash burn a bit.

[soul traders] 17/8/2006 08:50

Nice line on FT.com:

The news prompted Panmure Gordon, the broker, to forecast that Oxonica would report profits during 2007 and see sales rise to £21.4m by 2008.

[soul traders] 17/8/2006 08:48

Morning all,

I was interested by yesterday's RNS and have started my own thread over on an ADVFN competitor. I haven't read the whole of this thread on ADVFN, but here are a few quick views of my own.

Going by the information on Oxonica's website, it seems likely that the trial in Turkey is going to be reginal or multiregional at least.

My reason for suggesting this is that the Envirox product is effective at very low concentrations - 5ppm, or 5ml per 1,000L (see info on OXN's website: ). $12 million ought to buy a lot of the product and treat a lot of fuel! I also can't imagine they would just treat individual tanker loads; note the use of the words "for use in diesel fuel across Petrol Ofisi's nationwide distribution network" in the RNS; Petrol Ofisi would be looking to build some kind of brand and to assess the build-up of customer loyalty, so anything less than a trial covering several counties would be pointless.

Envirox is also awaiting approval by the EPA in the US - things should get interesting if that is successful!

[cootuk] 16/8/2006 18:58

The company I work for makes makes polymerisation inhibitors for use with chemicals such as styrene. There are two types of competitor.

First those companies that supply a generic chemical at least cost. These tend to be older non-patented materials, and cheaper producers like the chinese are beginning to take over the market. There is a reluctance by manufacturers to shift supplier unless there is a major cost benefit and guarantee of supply but not too much of a barrier to entry.

Secondly there are value-added suppliers. These use newer patented chemicals that have added benefits (such as sludge control etc) and also give major technical backup. These performance chemicals cost more per kg but can be applied at a lower dosage so there are overall cost savings for the buyer and also better profit margins for the supplier. Moving manufacturers onto these materials also stops them being poached away by cheaper suppliers of generics.
This is a major step for a manufacturer to take as any downtime or problems hit their production.

The trick is to give give enough data for a manufaturer to change over products and to give large technical input so that the change goes smoothly.
I would imagine this Turkish deal is being done at very little profit just so a real-life large scale scenario can generate data which will support future sales push with other companies. It would be nice to know if this is being added per tanker of diesel or at a central distribution depot...ie how wide spread is the trial.

It looks like a six month trial given they expect an update in Q1 2007.

[damanko] 16/8/2006 11:08

At this stage in it's evolution, I'd say that cashflow is more important than profit. Think the share price has been drifting down recently more through lack of news than anything else. This may help it for a while. If the Turkish "evaluation" comes good, next step would be to sign a few more deals on the back of it. Still the only Nano stock on the LSE, steady growth, the odd snippet of news, no real hype as yet, a couple of products on the market with serious customers... looking okay.

[cootuk] 16/8/2006 07:05

I wonder what the profit margin is?

[cootuk] 16/8/2006 07:03

"Oxonica plc ("Oxonica") a leading international nanomaterials group, today
announces that it has reached agreement with Petrol Ofisi A.S., the leading
national oil company in Turkey with sales of US$8.8 billion in 2005, to supply
its Envirox(TM) fuel borne nanocatalyst, for use in diesel fuel across Petrol
Ofisi's nationwide distribution network. This agreement is the first of its kind
for Envirox(TM) and is in line with Oxonica's strategy of signing commercially
significant deals with major partners to access the volume market.

The agreement provides for an initial supply of Envirox(TM) which will be used
by Petrol Ofisi to evaluate market acceptance of the new enhanced fuel within
its national market and is expected to generate sales for Oxonica worth US$12.7
million this year. Following the marketing evaluation, Oxonica expects to be in
a position to indicate likely levels of ongoing demand in Q1 2007."

[cootuk] 24/6/2006 17:20

Rent an office in Canada?



The University of Alberta based National Research Council National Institute for Nanotechnology (NINT) in Canada has opened and hopes to attract the brightest and best in nanotechnology.....

[cootuk] 08/6/2006 04:13

Two large trades yesterday at well under share price to get them shifted.

[cootuk] 17/5/2006 23:11

US FDA asked to regulate nanoparticulates



"Citing research suggesting that some invisibly small engineered nanoparticles might pose health risks, a coalition of consumer and environmental groups petitioned the Food and Drug Administration yesterday to beef up its regulation of nanoparticle-containing sunscreens and cosmetics and recall some products.".....

"Two years ago, Britain's Royal Society recommended that nanoproducts not be sold until they have undergone independent safety assessments and the results are made public. It also said that products containing engineered nanoparticles should be labeled as such, a move the industry has opposed.......

The FDA does not comment on legal challenges and has six months to respond to yesterday's petition."

[cootuk] 15/5/2006 15:03

Given recent 'heavy' falls over the last couple of days for many shares, the fact that OXN hasn't moved a blip shows how tightly held it is by institutions, and how little PI activity there is around it.

[cootuk] 05/5/2006 06:51

Trading is usually very light with fewer than 10000 shares per day, though someone must be buying these otherwise the MMs would walk the price down.
Someone somewhere sees value in this.

[damanko] 04/5/2006 09:45

I too think these "seem" way overvalued, on what we know through usual market means. I know that Foresight "C" owns 5,683,108 shares in Oxonica, though as FTVC's stated aim is to eventually liquidate holdings and return money to shareholders tax free, I can't really see why that should prop up the share price Foresight now has half a dozen VCT's under its wing, I'm not sure whether any of the others hold OXN as well. As part of the agreement with Stagecoach, they subscribed for shares in the OXN placing last year, as we know, and retain (as far as I know) a decent stake in the company. Could be some of these factors are making the market bullish on the stock...............

[cootuk] 04/5/2006 01:03

I'm not a holder and I have no idea of what the share price should be, just a gut feeling that it should be about half what it is. I have no idea how the share price is holding up so well either!

There are currently about 42m shares in issue.
£5m cash is worth 12p/share max, and decreasing.

What P/E should they be on?
Could they double sales each year for the next 2-3 years?
Too many unknowns to gauge a fair price until we know how Envirox is developing and how much extra the skin care side does - the september interims should flesh that out.

An share price of 160p and p/e of 40 would assume an eps of 4p, and that is over £10m turnover on current margins. This might be met three years down the line imho.

So I have no idea, just a gut feeling that it is massively overpriced atm.

[elfman] 03/5/2006 22:42

cootuk, at what price do you feel these are a good 'investment'? I myself sold out after the results. I believe you are not currently a holder but you seem to keep your eye on the ball.

TIA

[cootuk] 20/4/2006 06:37

Small biodiesel reactors.
With a company like Stagecoach owning part of OXN, this might be an interesting application that would suit both companies.

[cootuk] 31/3/2006 06:49

Patent trouble brewing for some companies....



"Well over 5,000 nanotechnology-related patents have been issued in ther U.S. as of late March 2006. The strongest growth can be observed in patents refering to "Nanoparticle" (147% CAGR since 2000), "Nanotube" (141%) and "Fullerene" (139%)....."

[elfman] 28/3/2006 22:18

I agree current pe is very high but this reflects potential for growth. The money/intellect has developed the products and so long as they are not too ambitious with their future developements then they should not need a further rights issue. IF the money spent on promoting the current products gets reasonable results then it should not be difficult to increase turnover form £1.2 million.

If not and they continue to spend then no doubt the share price will suffer.

Nanoplex technologies took £1:70 per share. They will be more in the know regarding potential and they took a deal above current share price so they must be fairly optimistic of future.

Stagecoach were impressed enough with envirox to take 10% of the company and IMO they wouldn't have done this if they didn't believe in the future earnings from this product alone.

Boots have often been market leaders in skin care and have been impressed enough with optisol to put it in their main sun creams.

All in all some impressive deals to date. I agree that investors in this company are looking forward, however this is a company in a sector that will expand rapidly IMO.

[cootuk] 28/3/2006 15:22

My guess of needing 10x sales was about right just to support current share price

The only reason I can see for the share price being relatively steady is that not many people are interested in this share, though I guess it wouldn't take many sellers to drive the share price down as there really isn't a good argument for buying atm.

[krishall] 28/3/2006 13:49

Perhaps in a couple of years time.... (They've great potential but with a present mkt cap of £68m then the share price is overdone).

[cootuk] 28/3/2006 07:59

I see the burn rate being so great they need another cash call within 2 years.

US EPA require more data for Envirox - could take another year at least.
Stagecoach rollout complete so need new customers.
Other companies and markets still in 'a limited number of early trials'.

Optisol rolled out and continuing orders received.

Everything else under development.

From the results I can't see an overriding reason to invest.
The cash burn is too high atm even if it is to support rollout of Envirox and Optisol - do they really need to spend so much for two limited product types?
Like I say I see a cash call within two years, and really don't think the share price is justified at current levels.

Maybe 2 years down the line when Envirox has EPA approval and the other technologies are closer to launch it may be worth looking at again.
Until that time it appears to me to be just another AIM company that has the uncanny ability to burn through shareholders cash.


Anyone want to present the bull case?...elfman?

(I have no position in this).

[cootuk] 28/3/2006 07:52

RNS Number:4841A
Oxonica plc
28 March 2006



28 March 2006

Oxonica plc

Maiden preliminary results for the year ended 31 December 2005


Oxonica plc (LSE: OXN.L), a leading International nanomaterials group, today
announces maiden preliminary results for the year ended 31 December 2005.


Highlights

• Turnover rose 219% to £1,247,000 (2004: £391,000)

• Gross profit increased 134% to £661,000 (2004: £282,000)

• Operating loss was £4,398,000 (2004: £3,207,000)

• Successful commercial rollout and take-up of Envirox(TM) and Optisol(TM)

• Raised £9,869,000 (net) during the year and admitted to AIM on 20 July
2005

• Acquisition of Nanoplex Technologies Inc, a developer of biodiagnostic
and security detection systems

• Established key strategic relationships with Croda, Mitsui and Hanjoo

• Oxonica is successfully establishing itself as an international
multi-sector business


Commenting on today's announcement, Dr Kevin Matthews, Chief Executive, said:

"Oxonica made significant progress in 2005 towards building an international
nanotechnology group with innovative products for the energy and personal care
markets being commercialised. This, combined with the key strategic deals
completed in the year, provides a strong foundation for growth in 2006 and
beyond."


For further information, please contact:


Oxonica plc 01865 856 700
Kevin Matthews, Chief Executive

[cootuk] 26/3/2006 20:21

It looks like they need to at least quadruple turnover to match the non-sales costs they have. From their fundraising it looks like they have about 3yrs of money to break even.
Assuming a P/E of 30 (generous?) and share price of 150p then they need eps of 5p...with 42m shares that means profit of over £2m. Which means they really need to up turnover by maybe 10x?
It will be good to see a breakdown of sales and how much the bus contract is adding to the coffers. How much extra has the roll-out added for turnover?

They seem a little overpriced on that basis to me, but I'll wait to see what the results turn up.

[cootuk] 26/3/2006 20:02

an article from 2001.

"According to a new study published by the Health Effects Institute (HEI), the use of cerium fuel borne catalyst for the regeneration of diesel particulate filters would result in a measurable increase of ambient cerium levels. However, even under the worst case scenario, the estimated human lung and body burden from cerium exposure would be substantially lower than that shown to produce health effects in animals.

Ultimately, the report says, decisions about the use of the cerium additive, or other metal additives, need to be made in the context of a variety of factors besides information on exposure, rate of clearance from the body, and health effects. Other considerations are the additive's ability to reduce harmful emissions, its persistence in the environment, and the feasibility and cost effectiveness of this technology in comparison with other technologies that can achieve these reductions."

The previous cerium oxide fuel borne catalysts apparently had quite a large particle size (Oxonica use approx 10 nanometre width) which was too inefficient, but the smaller particle size may have a different health effect to that measured previously imho. The above reports also use particulate matter traps.

The fact that the buses are still using the additive must mean there's a commercial benefit in using it, but it's certainly not the only enhancer out there.