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Itaconix – a “proprietary process with break-through economics”… as the shares break-through an 18% decline

By Steve Moore | Tuesday 13 February 2018


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Itaconix (ITX) states it uses a “proprietary process with break-through economics to produce unique or enhanced ingredients for the homecare, personal care and industrial markets”. ‘Break-through economics’ hey, let’s take a look at its trading update for the 2017 calendar year – with the shares currently ‘breaking-through’ an 18% decline on the back of it…

A statement from Chairman Dr Bryan Dobson commences that “Itaconix has achieved real commercial progress in 2017, albeit at a slower than anticipated revenue growth rate”. Hmmm, at least though this performance was “as already notified to the market at the time of the interim results in September” and Dobson continues that “the business is now well positioned with products in market and channels in place, both through major strategic partnerships with parties such as Solvay, Croda and AkzoNobel as well as a distribution network for Personal Care. The board is confident that the company is now well positioned to deliver revenue growth from 2018”.

However, the numbers provided question whether this will be sufficient. This is with they showing a retained operating loss (and a net cash outflow) of £5.2 million on revenue doubled – but to just £0.6 million, with year-end cash £3.6 million.

Additionally, writing down goodwill, it is admitted that “whilst the board believes that the company is well positioned to deliver significant revenue growth in the medium to longer term, it is anticipated that this will take longer to deliver than previously envisaged”. Hmmm, “now well positioned with products in market and channels in place” hey!

House broker N+1 Singer reduced forecasts in September – including for 2018 revenue from £3 million to £1.8 million and net cash down to £0.1 million. When’s it bailout fundraising ahoy then? With also the backdrop of “will take longer to deliver than previously envisaged”, natch this is on the bargepole list. Sell.


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