Nano One (CVE:NNO), the Toronto-listed battery technology specialist, has reiterated its strengths in the face of the coronavirus epidemic, which has been driving down valuations in the alternative energy technology sector to unprecedented levels.
The company, first covered by The Armchair Trader towards the end of last year, remains one of our medium term bets in the strategically important alternative energy technology space, as it addresses what will be a long term requirement for more efficient battery solutions.
The climate crisis has not gone away
Many of the factors we liked about Nano One remain in place and will be largely unaffected by the impact of the coronavirus epidemic over the longer term. If anything, the improvement in the atmospheric environment we are seeing around us, as planes are grounded and commuters are forced to work from home, demonstrates that governments will need to take action over the climate sooner rather than later.
Nano One remains well-funded: it has over $11 million in its treasury and a further $5 million in non-diluted support from the Canadian government. This gives it a runway of more than three years and CEO Dan Blondal says he feels the company is still well-positioned to catch what he calls “the environmental and investment sentiment that gave us such a tremendous tailwind in January and February.”
Nano One has hinted that it is also working with a number of “world class companies” behind the scenes, and there remains speculation about who these may be. We know that the firm is already partnering with the likes of Volkswagen, Pulead (China) and Saint-Gobain, but Blondal also says he is still being approached on a weekly basis by other big names.
Big companies are interested in Nano One’s technology
Big companies and technology are a funny thing: larger firms like to provide an impression that they have all the bases covered when it comes down to technology, that they don’t need to rely on technology from smaller companies. Even when they do, they frequently don’t like to draw attention to it. We know, for example, of top tier banks that rely on much smaller companies for critical parts of their infrastructure but would prefer their shareholders did not know this.
Manufacturers know that battery technology is going to play a key role in the next generation of green vehicles, for example. Battery materials will be a major factor in the production of energy-efficient batteries across a wide range of transport and industrial functions.
Companies like Nano One are extremely well positioned to benefit from the demand for their technology, but not necessarily able to discuss many of the agreements they have in place. But the company does have an extensive library of patents in place which means that there will be major players interested in having discussions with Blondal and his team.
Supported by the Canadian government
Nano One is unlikely to disappear in the current economically straitened times as it enjoys substantial government backing. It has a funding partnership with Sustainable Development Technology Canada (SDTC) and the Industrial Research Assistance Program. Its development team remains in place and continues to work on the projects the company already has in hand.
Shares in Nano One have traded down since the virus began to hit North American markets. The price has fallen from C$1.65 to C$0.93 at the time of writing. We believe this price does not reflect the fundamentals of this company and its long term future in the alternative energy technology market.
