Itaconix really is a tiddler, but that’s not to say it doesn’t deserve attention.
The firm — be warned it is majority backed by fund manager Neil Woodford who’s not on a great streak — is tapping into investor demand for eco-friendly products, developing sustainable polymers that can be used in detergents, dishwasher tablets and other household goods.
The products are relevant because, in 2017, the European Union banned phosphates in dishwasher detergent, following in the footsteps of Canada and some states in the US. Regulation aside, the so-called “naturals” category is no fad, as consumers demand products that don’t pollute the environment and make them feel better about themselves.
Nevertheless brokers tend to urge caution on eco-friendly companies as they can often sound revolutionary but then fail to deliver.
John Shaw, Itaconix chief executive sums up what the company does: “Our novel polymers offer great value as replacements for phosphates in detergents, which are being phased out due to environmental concerns.”
The company floated back in 2012 and has spent time testing products, hence its slow growth. Revenue last year came in at £800,000, while it also recorded an earnings loss of £4 million. As a result of the inconsistency its share price has been volatile but according to analysts at Capital Network things will improve.
In January the firm inked a deal with chemicals giant Nouryon, which will market the polymers to its large customer base. It has a similar supply and marketing agreement with Croda International.
With these two on-side Capital thinks revenues will hit £1.7 million in 2019, £3.5 million in 2020 and £6.5 million in 2021, the year the company is also expected to break even. Capital adds that Itaconix could hit £100 million in revenues by 2029.
Capital says: “We believe that these deals support strong revenue growth in the 2020 to 2021 time frame.”
Itaconix also makes polymers to give hair-styling products their “hold” and for use in things like sunscreen, body wash and cosmetics.
There are other competitors, including Allylix in the US and Canada-based EcoSynthetix, although neither are corporate giants.
Capital says the winners in this market are yet to be decided, so you pays your money and you takes your chances.
