Great site Zeebot. Given all the posts on BRN, time to broaden the horizons, something I've felt the need to do after BRN was becoming a little bit too big a part of my portfolio. It does still remain the largest holding though.
Hopefully NC6 is another another gem, and it's ticking most of the right boxes on the sustainability theme. Very large potential from a very small current market cap, and a company I have had a look at for a long time.
This is highly likely to be the year that things come together for NC6, but valuing the company has been difficult previously. In the absence of comparable companies, you might look to future profits based on potentially addressable markets. We have the rayon market at $30b, and can attack that with a Lyocell that is superior in every key aspect – stronger, finer and significantly more environmentally friendly. No reason not to be taking market share from other fibres either.
Then we have the personal wipes market, also around $30b, where we bring the same improved aspects.
But when comparing the competitor landscape in NC6’s April presentation, none were listed so a comparative valuation was difficult. With the listing of Spinnova in the 2nd half of 2021, this has changed. Spinnova has a current MC of around $865M (dropped recently from around $1B), so around 55 times that of NC6, yet if anything we would appear to have a superior product and overall process with probably only a slight time lag to key partnerships and market.
Spinnova claim they can use waste, but appear focussed on using tree based cellulose, and their process would appear to need significant capex, whereas our cellulose can feed into existing facilities for quick ramp up. Their product appears to have similar characteristics to currently used fibre, whereas NC6's has superior characteristics.
Both processes have great environmental credentials, but Spinnova still appears focussed on trees for feedstock.
So either we’re significantly undervalued, or they’re overvalued. I’d suggest the former, with the higher valuation probably due to the better profile they get in Europe, versus our current low profile in Oz. This will change as soon as high-end brands are linked to NC6, and taking our reports at face value, we can expect this reasonably soon. With the pilot spin due for completion this month, they should move into signing agreements with high end fashion brands pretty soon.
Having a massive partner such as Birla already signalling to the market about the emergence of Nullarbor fibre is a clear indication of confidence and direction. NC6 have missed a couple of deadlines, but overall they are looking likely to deliver on multiple fronts soon, and they do so on a very low cost basis - they really take good care of shareholder funds which is another great tick for company culture.
Hopefully NC6 is another another gem, and it's ticking most of the right boxes on the sustainability theme. Very large potential from a very small current market cap, and a company I have had a look at for a long time.
This is highly likely to be the year that things come together for NC6, but valuing the company has been difficult previously. In the absence of comparable companies, you might look to future profits based on potentially addressable markets. We have the rayon market at $30b, and can attack that with a Lyocell that is superior in every key aspect – stronger, finer and significantly more environmentally friendly. No reason not to be taking market share from other fibres either.
Then we have the personal wipes market, also around $30b, where we bring the same improved aspects.
But when comparing the competitor landscape in NC6’s April presentation, none were listed so a comparative valuation was difficult. With the listing of Spinnova in the 2nd half of 2021, this has changed. Spinnova has a current MC of around $865M (dropped recently from around $1B), so around 55 times that of NC6, yet if anything we would appear to have a superior product and overall process with probably only a slight time lag to key partnerships and market.
Spinnova claim they can use waste, but appear focussed on using tree based cellulose, and their process would appear to need significant capex, whereas our cellulose can feed into existing facilities for quick ramp up. Their product appears to have similar characteristics to currently used fibre, whereas NC6's has superior characteristics.
Both processes have great environmental credentials, but Spinnova still appears focussed on trees for feedstock.
So either we’re significantly undervalued, or they’re overvalued. I’d suggest the former, with the higher valuation probably due to the better profile they get in Europe, versus our current low profile in Oz. This will change as soon as high-end brands are linked to NC6, and taking our reports at face value, we can expect this reasonably soon. With the pilot spin due for completion this month, they should move into signing agreements with high end fashion brands pretty soon.
Having a massive partner such as Birla already signalling to the market about the emergence of Nullarbor fibre is a clear indication of confidence and direction. NC6 have missed a couple of deadlines, but overall they are looking likely to deliver on multiple fronts soon, and they do so on a very low cost basis - they really take good care of shareholder funds which is another great tick for company culture.
