Hi Guys,
Here is a professional appraisal of the above presentation courtesy of "State Wide Stockbroking"State One comment
A significant portion of the presentation was allocated to the group’s latest breakthrough – thedevelopment of low temperature RPCVD tunnel junctions. These junctions allow LEDs to be stackedvertically on top of each other; these “cascade LEDs” are described by BLG as a potential game-changerfor manufacturing smaller, cheaper and higher-performance LEDs. To date, functioning tunnel junctions,and therefore cascade LEDs, have been prohibitively difficult to produce.
The presentation also coveredthe Silverwater facility upgrade and expansion, the group’s revenue generating foundry service armEpiBlu, and BLG’s ongoing progress in growing and strengthening its IP portfolio. However, whilecommercial negotiations with Lumileds are continuing (although no longer on an exclusive basis), webelieve the presentation failed to clarify whether any progress had been made over the past fourmonths i.e., since mid-November 2018 when it was announced that commercial negotiations withLumileds had started. In addition, we do not know if BLG is also in commercial negotiations with anyother parties i.e., another LED manufacturer or an equipment manufacturer.
We suspect the marketneeds more visibility on these issues and some guidance on whether the apparent impasse is due tocommercial issues(i.e., related to royalty fee/licencing fee/patent rights) or technology/product issues
Our base-case remains that BLG will enter into a commercial agreement with Lumileds. However,because of the apparent lack of progress over the past quarter and continued poor visibility on thetiming and metrics of any commercial agreement, we have increased our risk discount to 66% from ouroriginal 50%. See initiating coverage research “At last...commercial negotiations now started”, 3December 2018.
As a result, our target price has fallen to 29cps from 43cps.
Regards all
