Pitt Street research report:...

Pitt Street research report: https://www.pittstreetresearch.com/s/Weebit-Nano-Update-24-September-2020.pdf

"Weebit Nano Ltd (ASX:WBT): Moving forward on multiple fronts

Weebit Nano (ASX:WBT) filed several patents recently to protect the IP of its silicon oxide (SiOx) Resistive Random Access Memory (ReRAM) technology. WBT, along with its research partner Leti, filed a very valuable patent that enables the company to develop an effective programming algorithm to implement multi-level capability in any OxRAM technology.

This patent will enable the implementation of multi-level programming taking into account typical physical shifts of the levels, which is common to ReRAM. After programming ReRAM cells, the ReRAM experiences a slight shift in its resistivity levels due to natural physical phenomena. Weebit's programming algorithm takes this shift into account and thus works with its “true” resistivity level and not the theoretical one. The MLC technology allows more data per unit area, leading to higher memory storage capacity and lower cost.

We believe this patent provides a vital competitive edge to WBT. The other two patents filed relate to reducing the select transistor size, which will enable production of smaller, lower-cost embedded memory modules.

Cashed up for commercialisation

WBT is moving towards ‘productisation’ and has completed the first stage of ‘stabilisation’, which was focused on making the process repeatable and consistent. This stage has improved the maturity of WBT’s technology, increasing cell-to-cell uniformity, leading to higher yields (more good dies (chips) per wafer).

Further, WBT recently completed a A$9.1m capital raise with the potential for another A$19.7m from the exercise of in-the-money options by investors. The funds will assist WBT in simultaneously supporting its growth plans for the embedded and stand-alone memory modules. Management aims to sign commercial agreements by Q2 2021, which we believe will significantly drive investor interest in the stock.

Valuation of A$1.36 per share

WBT has successfully continued its development progress on multiple fronts, such as R&D and pre-production, despite the setbacks of COVID-19. This reaffirms our confidence in management’s ability and the technology’s potential. We continue to expect strong upside potential for this stock and reiterate our intermediate valuation of A$1.36 per share.

Following the recent share price moves, we expect the stock to further re-rate if and when the company succeeds in closing its initial commercial agreements, expected in 1HY21"