Haydale Graphene Industries – Capital Network: The Tipping Point

Writen by Ed Stacey


The nanomaterials market is transitioning from a concept technology to commercial applications. Haydale (LON:HAYD) specialises in the integration of nanomaterials into commercial and industrial technologies. We argue that this is a good position to occupy within the value chain – exposed to end market growth but not exposed (negatively) to the likely future price compression in raw graphene or other nanomaterials.

Major applications for Haydale (LON:HAYD) include composite materials, specialty inks and coatings, and additive manufacturing (3D printing). The nanomaterials are graphene and silicon carbide, and potential others in future. We argue that these applications have now reached a tipping point from research to commercial reality (see pie charts p2).



In the trading update of July 19th, Haydale (LON:HAYD) announced that FY June 2017 total income (revenue and other) has doubled, meaning about £3.9m for the year. Based on the order backlog, and major projects under way, we expect further strong growth in the next few years. We consider two of the specific channels for further growth.

In November 2016 Haydale announced a Joint Development Agreement with Huntsman Corporation to develop graphene enhanced resins. Adding small amounts of graphene in the resin layers of materials like carbon fibre can dramatically improve (x10) the dissipation of electrical charge (aerospace applications) and heat (aeros and autos). The deal with Huntsman potentially dramatically accelerates Haydale’s penetration of this market.

Secondly, Haydale’s progress into Asian markets should benefit, in our view, from a couple of developments – the September 2016 acquisition of Innophene in Thailand, and the February 2017 collaboration agreement with Everpower International Holdings. Opportunities in Asia include specialty inks for bio-sensors, various composite materials, and additive manufacture technologies. 
In this report we present a snapshot of the revenue growth profile (charts on p2).


The shares currently trade on 5.5x EV/Total Income on our FY June 2018 forecast, which is not unusual for an early stage growth stock. We believe that revenue growth will be the main determinant of share price performance in the next few years. Investors should track order intake as a forward indicator for revenues (see chart p2).




The charts above show the global market for graphene, according to industry researchers. The conclusion is that the market has reached the transition point from being a laboratory material to being a commercial material. Most relevant for Haydale are the composite materials and inks and coatings segments. In addition Haydale has growing revenues Silicon Carbide and opportunities in other nanomaterials.


The chart below left shows our forecast for the Total Income for the group in the next few years. We have broken this down according to the two Strategic Business Units – Resins, Polymers & Composites, and Advanced Materials (inks and coatings, 3D printing, other). We have separated out grant funding, which becomes a proportionally smaller part of the mix going forward. The principal source of grant funding is Innovate UK, and we expect this to continue post-Brexit, gradually becoming a smaller percentage of the total.

The chart below right shows the size of the firm order backlog. Encouragingly, as of the July 19th update, the backlog has grown to 132% of trailing 12m Total Income, which gives us an additional level of visibility. We’d expect the company to give regularly half-yearly updates going forward, and order book should become a useful guide for investors as to the forward growth trajectory.



Important – Please read this information: This report has been commissioned by Haydale Graphene Industries PLC and prepared and issued by Capital Network for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however, we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Capital Network at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. Capital Network does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Capital Network’s solicitation to effect, or attempt to effect, any transaction in a security. This document is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Capital Network has a restrictive policy relating to personal dealing. Capital Network does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Capital Network may have a position in any or related securities mentioned in this report. Capital Network or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Capital Network within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Capital Network, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication.

Haydale Graphene Industries PLC Timeline

Latest Research