Investing Ideas for a Finite Planet: Episode #1 - $META
A Canadian nanotech firm is taking over the Nasdaq listing of an oil exploration company and retiring its assets. It's had lots of hype but what do Metamaterials do and how sustainable are they?
Welcome to the first of my write-ups exploring growth stocks in the emerging clean, circular economy. We know the climate crisis is accelerating, and business as usual is unacceptable. At the same time, achieving financial independence has never been more important - and long-term investing in the stock market is proven to be a safe way to do this. I want to connect these two phenomena, by exploring the sustainability of companies at the head of emerging megatrends in our rapidly-changing world.
None of what you read is financial advice. Please do your own due diligence.
TODAY’ STOCK - $META
'a smart materials and photonics company, with the mission to change the way we use, interact and benefit from light and other forms of energy'
Metamaterials (currently trading as MMAT on the CSE 🇨🇦) announced it is merging with oil drilling company Torchlight ($TRCH - Nasdaq), subject to $TRCH shareholder vote (due March 2021). The newco will trade on Nasdaq as $META
Torchlight’s oil exploration assets will be sold and proceeds paid to $TRCH shareholders as a dividend.
KEY POINTS
In this article we’ll explore
What Metamaterials Inc do
The megatrends they embrace
Their growth and financials
Their green credentials
SUMMARY
💵 Market Cap: $169CAD (source: KoyFin)
🔬 improving the properties of materials at the nano-level
🍎 using knowledge & facilities to solve problems for other companies
🎳 well-placed to target multiple rapidly-scaling sectors
INTRODUCING $META
The company uses composite structures at the nano level to improve the properties of materials to create metamaterials and functional surfaces. The 21st century will see high performance invisible materials that will enable multiples better performance at lower cost. Meta has produced a range of its own products and acts as product development partner for companies in the consumer electronics, clean energy, automotive, medical, aerospace and more.
ACTIVITIES
The Metamaterials product suite is at the forefront of commercialising some of the most exciting developments in new technology. Their high-performance innovations overlap a number of the most dynamic areas of the emerging economy:
- Holography - making security and detection devices of all kinds smaller & more accurate
- Rolling Mask Lithography - Patented process for making large sheet materials with nano-properties that can block, absorb or enhance light
- Wireless Sensing - eg non-invasive glucose sensing, low-cost non-invasive blod clot & breast tumour devices in development, a device placed inside existing MRI scanners that increase their effectiveness
- In-house custom product development for 3rd parties
Current Products
- NanoWeb: near instant de-icing and defogging of all kinds of screens/goggles/windows, electromagnetic/wifi shielding
-metaAIR: optical protection from lasers, backed by Airbus to safeguard crew and passengers
-metaOptix: holographic films which transmit or reflect light in specific ways, incl transparent displays (eg smart autoscreens) & wearables for AR applications
Products in development
- metaSOLAR: deploying NanoWeb to create films which increase PV yield, protect lidar/radar monitors
- GlucoWise: non-invasive glucose monitoring
But the inherent flexibility of the design process means the applications are INFINITE
Key partnerships
GROWTH AND FINANCIALS
Trading since: 2011.
https://app.koyfin.com/share/d0accdc317
Reporting a loss of $12M on turnover of $1.5M, with $3M cash in reserve
Metamaterials Inc attracted >$75M funding to date. Production facilities in Canada, with offices in Canada, US and London. In 2020, listed on Canadian Securities Exchange ($MMAT) 👇
Growth through acquisitions:
2015 Rolith to increase manufacturing capability
2018 MediWise, medical devices
2020 Crossover Solutions to enter auto industry
2021 InterGlass, Lens manufacturing
Awards:
2019 Global Cleantech 100, 2017 Fortune (Greece) 40u40 for Founder/CEO George Palikaras, EY Emerging Entrepreneur of the Year, 2018 Laureate Award Best New Commerical Product (Aviation)
- Founder/Owner still at helm
What are metamaterials REALLY?
MEGATREND OPPORTUNITIES: WHICH PROBLEMS ARE THEY HELPING TO SOLVE?
Augmented Reality: holographic displays add multiples of performance to headsets and eg automotive display/device touchscreen. Overcoming the drawbacks of glass
Non-invasive & connected medical diagnostics & imaging: affordable, mobile devices for radiowave imaging eg for bloodclots in the brain and breast tumour, and glucose monitoring
Solar aviation: higher output, lighter weight and lower cost solar films making possible solar powered aviation
Clean energy transition: increasing PV output, & reducing Rare Earth Metals composition, increasing supply chain security and reducing despoiling landscapes with toxic sludge.
Automotive & Autonomous mobility - eg windshield display, replacing wingmirrors with more accurate holograms
Wearable health devices - film applied to wearables to monitor eg glucose levels non-invasively
5G - invisible film applied to windows can eradicate internal signal loss and refract wifi signals to reduce signal blackspots in urban areas
IS IT CLEAN DISRUPTION?
Demonstrably yes. Its helping dispose of some mining assets which is a great augur of the coming transition. This evidence of cleantech displacing legacy fossil fuel co's from the public markets. GREAT!
BUT…
Its not currently clear if there is an ongoing business case for those assets and whether they will continue to operate in other hands, or be decommissioned after sale.
So instead, let’s concentrate instead on the environmental benefits of the nanotechnology itself.
HOW CAN WE MEASURE SUSTAINABILITY?
There are many ways to think about measuring sustainability. One way is to see how many of the United Nation’s Sustainable Development Goals the business activities contribute to
SDG 7 | 15
BOOSTING CLEAN ENERGY & TRANSPORT
Its tech will help increase PV yield, a market set to increase globally from
Reducing use of reliance on rare earth minerals esp lithium
Lightweight solar film increases possibility for solar aviation and other difficult to decarbonise applications
SDG 5 | 10
EQUALITY
Inaugural member of Canada's 50-309 programme - 50% female board and 30% underrepresented communities
The best framework available for thinking about impact in the round is the UN Sustainable Development Goals. Lets see how $META scores against these metrics
SDG 9 | 11 |13
REDUCING RARE EARTH MINERALS
Nano-material manipulation reduces and in some cases eliminates reliance of existing types cleantech on rare earth minerals and metals such as lithium. Rare earth mineral mining involves the extraction of 17 trace elements through either soaking mining spoil in lakes of chemical or pumping chemicals into the ground and processing the slurry outflow. As expected, either process is associated with significant environmental degradation and negative health outcomes as chemicals have been shown to leach into groundwater.
China is understood to have 95% of proven deposits of REM. It has also sought to tie-in a number of African countries with exclusive mining agreements in return for infrastructure spending.
The German government research has indicated that the most promising course of action for mitigating the harmful environmental effects of increasing demand for REM is improving material efficiency (source:
https://onlinelibrary.wiley.com/doi/full/10.1111/jiec.13090)
EXTRA READING
ALTERNATIVES: NATURE-BASED SOLUTIONS
One alternative to using toxic chemicals is to use plant-based remediation techniques or fyco-mining - using the roots of reed grass to extract the trace metals naturally. This also produces biogas as a biproduct, which offer the potential to stack clean energy benefits on the value of the rare metal production.
SDG 12
DECARBONISING & SHRINKING SUPPLY CHAINS
An additional environmental benefit that advanced nano-materials offers is a reduction in shipping footprint of global supply chains, as REM do not have to be imported from overseas territories. On average, the lithium used in an EV battery has travelled 50,000 miles before it reaches the car plant for fitting.
This great video which explores ways to reduce the footprint of the EV battery market here in the UK gives you an indication of the scale and expanse of the problem
(MGC has contacted MMAT for further details on the volume reductions of REM expected to be achievable)
Links https://earth.org/rare-earth-mining-has-devastated-chinas-environment/
SDG TOUCHPOINTS
Metamaterials are working in areas that offer improvements in 9 of the 17 SDGs
The next step will be to understand the extent of the improvements compared to existing ways of producing these products.
SIZE OF MARKETS/TAM
AUGMENTED REALITY
GLUCOSE MONITORING
5G AND IOT
RISKS
- very small company, yet to prove itself
- little financial data publicly available before NASDAQ listing
- larger and well resourced operators/competitors in each segment
RECAP
MicroCap stock with strong presence in nanomaterials
Working at intersection of multiple emerging megatrends
9/17 SDG touchpoints
Shares of $TRCH purchased before deal will be worth 25% in newco $META
POSITION SIZING
We have an entry position in $TRCH and intend to expand to MMAT. We will add to $META once the merger has completed in Q1/2.