Intersuisse: Dyesol Limited DYE Friday 28 March 2008 Cat on a Hot Tin Roof - Pioneer in Dye Solar Cell technology preparing to pounce Recommendation: Speculative Buy – Cash, revenue, major upside potential Corporate Background and Investment Rationale DYE’s 3rd Generation Dye Solar Cell technology was developed by Gavin and Sylvia Tulloch, who indirectly hold some 23% of the equity. The Tullochs have substantial experience in high technology management and have been pivotal in development of DSC in Australia over 15 years, both through DYE and its forerunner and subsidiary STI, and named as inventors on Dyesol patents. DYE’s particular attraction is that it has brought its DSC technology to the stage of commercial production. It has a capital-effective strategy of building an industrial scale manufacturing operation for supply of key material, equipment and components for other corporate partners to manufacture and market the solar energy panels or other applications for commercial use. Customers and collaborators include Sony, Sharp, Samsung, Corus (Tata), G24i, a German conglomerate and many laboratories worldwide. DYE is one of CNBC’s 2008 ‘Top 100 Low Carbon Emissions Pioneers’, a global list of companies doing the most to combat climate change. The global solar photovoltaic industry, valued at $15bn in 2006, grew over 40% in 2007. A partnership since 2006 with UK steel company Corus, now part of Tata, is for the application of DSC on steel sheeting as part of themanufacturing process. Globally, over a billion square metres of coated steel roofs are erected annually – an unmatched opportunity for solar electricity generation. Currently, no other solar technology can be integrated into coil coating of steel sheets. The nano-paint, overlaid with the dye and electrolyte, will be applied at high speeds as the steel passes down the line. Demand is expanding for buildings with lower energy use and carbon footprint (particularly in the U.K. and Europe with the legislated requirement for zero energy buildings). The Dyesol-Corus project has won a Welsh grant of up to $5m for 50% of costs. DYE listed in August 2005 and is based near Canberra where it is relocating to increase capacity up to ten-fold by 2Q08. The new facility is needed to fulfill forecast commercial dye orders of over $10m a year, making a much larger volume and range of titania pastes and dyes, with facilities for glass tile and flexible product applications and test equipment for supply to research laboratories and custom manufacturers. An instance of this is DYE’s work for a Turkish group to supply solar glass façade panels. Other turnkey projects are in view in Europe and Asia, while laboratory quantities are being supplied to a range of universities and corporations for evaluation and development. DYE has subsidiaries in Switzerland, UK and Singapore and Italy. A significant customer is UK-based G24i, the first company to announce mass manufacture of Dye Solar Cell modules, supplying DYE’s largest dye orders. DYE has received its 6th Milestone payment, $275.000, from the Department of Defence under its contract to demonstrate flexible Dye Solar Cell modules that give virtually complete camouflage while providing power for charging. Last July-August DYE raised over $22.5m at $1.10 by a placement and SPP. Some 25% of its stock is traded on the third German market. Its manufacturing plans and facilities are estimated at $5m and cash burn $6mpa. Critically, income should rise to hold cash near to $20m avoiding further capital needs. DYE has set up a strong commercialisation team, adding an experienced COO, two senior engineers, an IP consultant who worked for 20 years at Lausanne and building the team to around 50, with only 20% directly in R&D and IP. It has a board and consultants experienced in the field and in commercialization. Revenues are expected to more than triple to close to $6m in FY08 and rise to around $15m and $23m in the next two years. Development contracts should comprise $3m to $6m, equipment sales $1m to $8m and materials the balance. Recommendation Impact Dyesol is positioned as the leading global supplier of technology and materials to the DSC sector, 2008 will see substantial progress in its alliances and commencement of production sales. At these prices a Buy for the future.
GSL Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
