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The Versarien share price continues to soar. Time to buy?

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It’s been a busy morning of reading for shareholders in advanced materials engineering firm Versarien (LSE: VRS). Dispensing with its tradition of releasing news at the start of the week, the Cheltenham-based business made two announcements to the market today, both of which have done its share price no harm at all.

Indeed, given the momentum exhibited over the last few weeks (not to mention the likely newsflow still to come), I’m beginning to think that Versarien’s stock could continue to rocket over the remainder of 2018.

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The first announcement made this morning related to the launch of Graphinks — the brand name for Versarien’s proprietary graphene inks. These non-toxic, “high performance, electrically conductive” inks can be used in a variety of applications, according to the company, including the production of “flexible electronics and antennas“.

Developed at the University of Cambridge, Graphinks now joins Versarien’s Nanane (graphene) and Hexotene (hexagonal boron nitride nanoplatelet powder) in the company’s growing list of 2D materials.

According to CEO Neill Ricketts, there are “numerous potential applications” for the new product which can be modified based on the requirements of the customer. He added that the small-cap anticipates “substantial commercial demand” for Graphinks. 

You can’t really get more bullish than that.

Yet another agreement

The second of today’s two announcements was arguably more along the lines of what investors have come to expect from the firm, namely news of a new collaboration.

Having signed up with consumer goods businesses, an apparel manufacturer, and a major tyre producer (to mention just a few), today Versarien revealed the signing of a deal with Indian firm Arrow GreenTech. According to the announcement, the latter is “a leading global manufacturer of cast water-soluble film, providing solutions and applications for sectors including agrochemicals, construction, chemical, embroidery, health & hygiene and 3D printing”. 

Broken down, the agreement involves the £150m cap providing Arrow GreenTech with its graphene inks for the latter to supply the global water-soluble film market. In addition to this, the companies will collaborate on how graphene could be used within banknotes and passports — another pie that Arrow Green Tech has its finger in — with the new partner also acting as Versarien’s “exclusive agent” when it comes to supplying the super-strong product to India’s tyre sector. Rounding things off, the UK business stated that Arrow GreenTech would have “first refusal” regarding any discussions on the creation of a manufacturing facility in India. 

Commenting on the deal, Arrow Greentech’s Chairman and Managing Director Shilpan Patel reflected that “environmentally friendly” graphene was “the new wonder material of this century” and his company sees “a large number of potential end uses in various industries”. 

Perhaps you can be more bullish, after all. 

More news to come?

Having climbed over 75% in value since mid-May (including today’s 10% rise), many market participants may suspect that Versarien’s shares might lose a bit of momentum after today as traders bank profits. While some volatility is only to be expected after such a significant rise, I suspect any drop might be both relatively minor and temporary. Here’s why.

Reflecting on the company’s latest agreement, Versarien’s top man reassured investors that further updates on this new relationship would be forthcoming, “alongside the others we are establishing globally“. That last comment is key.

Back in January, Versarien revealed that it had signed a letter of intent to build a China-UK graphene manufacturing centre in the Jinan Innovation Zone with the long-term goal for this to be the heart of the Jinan Graphene Valley. While nothing can be guaranteed, a positive update on this would surely be lapped up by the market. 

Versarien’s recent appointment as “the inaugural Industry Council member and Corporate Partner” to the National Graphene Association — which promotes the commercialisation of the super-strong material — will likely mean that deals with the US-based businesses could also follow in the near future, underlining the former’s massive growth potential and growing geographical diversification.

With graphene finally beginning its move from research labs and into the commercial world and the strong possibility of at least some (if not all) of the company’s many collaborations evolving into orders, it’s almost inevitable that more institutional investors will decide to jump on board too.  

In sum, I remain very encouraged by Versarien’s progress. If only some of the above comes to fruition, it seems feasible that many of those holders who purchased the company’s shares in bulk towards the end of last year will be realising financial independence earlier than they ever dreamed. 

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Paul Summers owns shares in Versarien. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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