Company Overview: ClearVue Technologies Limited (ASX: CPV), which is an Australian technology company operating in the Building Integrated Photovoltaic (BPIV) sector which involves the integration of solar technology into diverse industries, was incorporated in 1995 as Tropiglas Pty Ltd and later was converted to an unlisted public company, Tropiglas Technologies Limited. The headquarter of the Company is situated in Perth, Western Australia and is being currently headed by Mr. Victor Rosenberg - the current Chairman and Managing Director. The group has developed a clear, energy harvesting window technology and advanced glass and glazing system which caters to demand from glass industry, Agriculture and horticulture sector, Commercial and residential sector, Public amenities, Mobile, wearables and internet of things (IoT) applications, and Motor vehicles sections. It is noteworthy that the Company’s technology is protected by 34 granted patents and by 39 patent applications throughout the world. The company has licensees for Australia, Japan, Singapore China, Europe & United States.
 

CPV Details

Unique Business Model: ClearVue Technologies Limited (ASX: CPV) has a unique business model. The group generates revenue from the multiple sources such as licence, royalty payment, and sale & supply. The targeted customers of the company are glass manufacturing, glass framing and building and construction industries. It intends to promote and sell its product mix within the agriculture and horticulture, commercial and residential, public amenities and consumer electronics markets across the region. However, the Company is yet to move from the progressive stage. Quality is a primary parameter for the success of the business. So, the management has more focus on quality products to build consumers trust and that’s why it is continuously keeping its strength by doing product development & innovation in its R&D laboratory. The company product remains a market leading product. Hence, we trust on the management’s ability to address growth opportunities ahead backed by its unique business model.

Unique Operational Model (Source: Company Reports)

High entry barriers’ led business model - an advantage: High fixed cost to develop unique glass technologies, healthy competition, need of strong R&D setup and long gestation period to set up its brand level into the existing market provide, for entry barriers which put the company into an advantageous position in terms of enhancing market share.

Quarterly Cash Flow Update (30 June 2018): The Company released its Quarterly Cashflow report for the quarter ended 30 June 2018 wherein net cash outflow from operation recorded $0.575 Mn, backed by incurred operating expenditure, net of government grant receipts during the same period. This outflow was higher than budgeted for future quarters because of the payment of outstanding creditors in June month which were deferred until completion of the IPO, including research & development costs which will be included in a R&D Tax Incentive claim by the Company. The Company had AUD$3.8 million in cash at the end of the June 2018 quarter and is well funded to meet its strategic objectives as outlined in its IPO prospectus i.e., commercialize the company’s technology in accordance with the business model and growth strategy. Further, the group estimated cash outflow for the next quarter of approximately $580k comprising of R&D expenses ($160k), product manufacturing and operating costs ($50k), employee cost ($150k), advertising and marketing ($50k), intellectual property costs (70k), and administrative, legal and corporate costs ($100k).


Estimated cash outflows for next quarter (Source: Company Reports)

Completed Product Certification Testing– To Support Top-line Growth: CPV has successfully completed product certification testing for its high technology solar window product to Australian Standard AS 2047 and to European Standard EN 14351-1:2006+A2:2016. These certifications allow the group to use its products along with installation into the Australian and European market and will provide support for product promotion and its initial sales into the same geographic region. Besides this, the company is separately undertaking AS 4284 certification testing for Australia on the Company’s glass curtain wall product with the results which is expected to provide to the market during August 2018.  We believe that the testing and certification of its window product for the European market reflects an opportunity wherein they can promote and sell their products legally. On the other hand, the group’s Intellectual Property and technology development portfolio continues to expand with earlier filed patents which are now being granted and issued in different countries around the world – the most recent, of which was the issue and grant in Japan (Patent No. 6359661) on 29 June 2018 of one of the company’s patents for its frame design as originally filed in 2014. As of now, the group has 34 granted patents and 39 patent applications throughout the world. Additionally, it intends to undertake further development efforts to improve and expand the range of licensed proprietary technologies which will support the topline growth of the company in the upcoming period.


ClearVue PV Applications (Source: Company Reports)

Synergistic Agreements with World Class Technology Partners for Overall Growth: The company has recently signed Memorandum of Understanding (MOU) with Mirreco Holdings Pty Ltd to develop carbon-negative residential and commercial solutions that incorporate ClearVue’s solar window technology and Mirreco’s industrial hemp product which is used as paneling material to create eco-friendly structures. Besides this, the company has a strong partnership with several world-class technology partners such as Nanyang Technology University (Singapore), Singapore HUJ Alliance, and Chinese glass manufacturer company i.e., Rocky Industry Co. Limited and expects that these synergistic partnerships and MOU will support the overall growth of the company in the forthcoming period with further opportunities in the domestic and international market via collaborations. This is expected to find support from increasing strength of its solar printing technology.


World Class Technology Partners (Source: Company Reports)
 
Financial Highlights: Revenue and other income recorded A$62,922 in FY17 which relates to the sale of products and grants, rebates and interest income. However, net loss after income tax expense amounted to $ 718,955 in FY17, up from $ 550,272 in FY16 at the back of higher administrative expense and borrowing cost during the same period. Net cash outflow from operating activities came at $0.30 Mn compared to $0.575 Mn on PCP basis. Net cash flow from the financing activity stood at $1.51 Mn compared to $0.465 Mn for the same period a year ago on the support of rise in the issuance of ordinary shares.  As at 30 June 17, the Group had consolidated total assets of $ 2,325,060 (FY16: $ 1,412,720) with the cash balance of $ 509,789 from cash reserve of $ 176,368 in FY16. In May 2018, the company raised $ 5 Mn through initial public offer (IPO) with the objective to commercialize Company’s technology in accordance with the business model and growth strategy. The current ratio stood at 2.08x which is above the industry median (1.34x). At present, the company has a decent cash position with zero debt facility. This improved liquidity position will support to execute its business development plans and it will generate higher returns in the near future. No dividends were proposed or paid since the start of the financial year.


Financial Highlights (Source: Company Reports)

Positive Outlook: We are optimistic on the company at the back of financials, securing strategic partnerships, increasing patents and intellectual property rights in all the key geographic areas. Moreover, the company has received a positive response from the market for its product portfolio that caters to building & construction, agriculture, and public amenities industries. It has also received strong interest in manufacturer/fabricator partnership from various regions such as Australia, Asia, Europe & MENA. As of now, the group eyes onto use the energy through innovative building materials by offering a powerful renewable energy solution that incorporates solar energy generation into transparent glass – this represents upside catalyst in the near future.

Other key update: During the quarter for the period ended 30 June 2018, the company announced that each of the Non-executive Directors agreed to reduce their director fees from AUD $48,000 per annum (p.a.) to $25,000 p.a. This reduction indicates ongoing efforts to reduce corporate costs which will support to expand the bottom-line in the next financial statements.

Stock Performance: The company has a key market-leading position in the construction of glass that utilizes otherwise wasted energy, converting it into solar electricity. Following the listing on the ASX, the company focuses on to commercializing its technology and the MOU with Mirreco is an important first step in establishing a growing order book. Hence, we expect that the company has strong growth potential in years to come post commercialization milestones. Meanwhile, CPV stock has fallen 13.58 per cent in the last one month (as at August 16, 2018). Given the recent upside movement of 1.45 per cent in the past one week while the stock slipped by 10.0% on August 17, 2018, there exists an investment opportunity at the lower base. It is worth noting that the stock was up by 66.67 per cent since listing on ASX (May 25, 2018). Given the backdrop of aforesaid facts along with improving performance and capital position and progress on testing and approval front with few product launches due in the upcoming period, the stock is expected to be witnessing momentum in future. Hence, we give a “Speculative Buy” recommendation on the stock at the current market price of $ 0.315.
 

CPV Daily Chart (Source: Thomson Reuters)

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