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#Nexam Chemical: Q4 report a pleasant reading

NexamLogoNexam Chemical reported its Q4 2013 results yesterday and the report was a very pleasant reading indeed.

Given the fact that Nexam is only at the beginning of its commercialisation phase, the actual numbers were not so much in focus at this stage. We took a closer look at the CEO (Mr Per Palmqvist Molin) comments and felt reassured that the company has a bright future ahead.

Mr Morin started off by saying that Q4 was an eventful quarter filled with activities. Amongst others, Nexam entered into non-disclosure agreements with several large Asian and European organisations. Nexam was visited by a number of large potential customers and partners, whereby there was an opportunity to discuss both future partnerships and new development projects. Sample deliveries were made to several players in Japan, China, the EU and the US for tests. Nexam St. Andrews produced and delivered contracted external customer orders and high temperature resin for the Clean Sky Project, in addition to all of the quantities of Nexam crosslinkers produced. We find it very encouraging in this context that Mr Morin adds: “In spite of everything that is going on now, it still feels like we are just at the beginning of an interesting development for the company – the interest in our products seems to be increasing nonstop.

Furthermore, work on building Nexam’s patent portfolio is also going according to plan and Nexam obtained two patents important for the future during Q4. One of the involves the unique molecule MEPA, which, among other things, is used for crosslinking nylon. The other one was a patent for the production of EBPA, one of the products used in high-temperature material, which is under development in cooperation with Rolls-Royce Jet Engines.

Mr Morin then goes on to mention the major commercial orders taken in 2014 so far, i.e. BASF and Armacell, stating amongst other things that: “PET foam makes up a small portion of the entire polyester market, which gives you an indication of how much more there is for Nexam to tap out there. The untapped market opportunities for Nexam’s crosslinkers are just about unlimited.”

Elsewhere, Nexam has entered into an agreement with a European agent, who after just a few weeks of work has identified several interesting business opportunities in the short-term. Furthermore, screening is ongoing as well to find a suitable partner who can develop the market in India.

Preparations for upscaling production have also been made recently with three select contract manufacturers to secure production capacity for Nexam’s products as demand increases. Mr Morin then goes on to mention the Board’s decision to initiate the process of preparing the company for the switch to Nasdaq OMX Stockholm Small Cap. The change in listing is seen as a natural step leading up to an expected growth phase and Nexam’s aims to boost confidence both from large global customers and other stakeholders. Naturally, being listed on Nasdaq OMX will also increase interest from major investors and equity analysts.

Mr Morin concludes his comments saying: ” I look forward to 2014 and expect that it will be a year that we will remember as “the year Nexam’s products had their commercial breakthrough.

Who doesn’t want to be a part of that?

Nordic Investor


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