Why hold?
If you ignore the share price (a very hard thing to do!), BLG is doing what they said they would do.
They have raised capital to invest in new facilities. The facility upgrade is complete. The first machine has been commissioned with an upgraded chamber design and is now producing output for customers and product development. The G4 machine has been installed and is currently being converted to RPCVD in partnership with the manufacturer. The conversion has been delayed due to delays in the manufacture of custom components. With a bit of luck we should hear more on this soon and with even more luck, the conversion will be successful.
How do you know the conversion is successful? You need to test it and this can take time. Just because the parts arrive and are installed, don't expect an announcement the next day.
With an operational G4, BLG will be able to demonstrate to the industry the existence of a commercial scale RPCVD platform. This will be a world first. There aren't many world firsts that come in on time & budget! That is the reality of cutting edge technology.
The G4 will allow demonstration of scaling which is required for the low margin / high volume LED industry. Lumileds and others would be interested in what BLG can achieve with the G4.
Laser Diodes.
BLG is already working on laser diodes with multiple customers. Through this work and with the development of tunnel junctions and active as grown processes, BLG are is a position to provide customers a complete laser diode product. Laser diode development will be done with existing and new customers through paid prototypes. That is, the customer is willing to pay for the product before it is fully developed. BLG would be in a better position than us here on HC to determine what the market opportunity is and any associated risks.
It is important to note that the laser diode product is not a distraction. They have been doing all the work already. They are just grouping things together and turning them into a product. Obviously productising this work is a new thing!
I believe BLG sees laser diodes as a reasonably short path to market that will add significantly to the existing Epiblu cash generating business.
Once the G4 is up and running, BLG will have substantial capacity to service the Laser Diode and Epiblu businesses, in addition to other product development.
BLG expect there to be a growing pipeline of businesses wanting to develop new products using RPCVD. At some point, these business will complete their product developments and start releasing them to end markets. Large product volumes will require RPCVD machines and associated licensing.
Capital
BLG will need more capital this year and I believe they would already be looking to when and what form this will take. The size of any raising will be offset by Epiblu revenue and tax refunds. It should be remembered this past year is not indicative of the cash generating performance of Epiblu. The tunnel junction work took priority. There was also a large one off capital spend. I believe the timing of any raising will allow for any forthcoming good news to support the SP. There is also the possibility of BLG getting other sources of funding.
Share Price
In 2015 you could buy shares for 5 odd cents. In 2018 they cost up to 53 cents. There are wild swings in SP that are difficult (if not impossible) to understand. It is important to note that the SP can move in both directions on low volumes.
We are currently in a bearish trend and anyone doing charts can draw lines and decide it is time to sell. They are looking at a chart, not the company. Anyone thinking of buying shares who reads HC would probably sit on the fence or walk away. Anyone who sees the SP sink and others rise, might jump ship. Anyone who wants the SP lower can just buy on market and then strategically dump them. The loss is just the cost of lowering the SP. When (if) the raising comes sophs will not be limited by a $15k SPP. There maybe others out there who have done a deal to acquire shares on a monthly basis at a discount to the current SP. Actually, there is a deal like that.
Another reason for the SP to fall is that any positive investors have to decide whether to buy on market which supports the SP but allows someone to reduce/exit their holdings - or - save the money until BLG needs it. What to do?
Why hold.
BLG are closer to commercialisation than at any point in time and I believe they will get through the valley of death and succeed in their business endeavours. RPCVD is a technology that will (hopefully) enable the next step in the development of a wide range of products and the introduction of many new products that have not been possible with existing technology.
BLG is currently working with the industry on non-exclusive deals. This opens up the opportunity for widespread adoption of RPCVD, just like MOCVD is widely used. If that happens, and the are currently no (guaranteed) reasons why it can't, the BLG SP will be a LOT higher than it is today.
That's my 2 cents.
(20min delay)