Thoughts re. Ilika (IKA)?

Hey all.

I’m a relatively new and inexperienced investor, who owns shares in a few big companies, but one smaller company that has caught my attention is Ilika (IKA). It’s a British battery manufacturing company that is developing solid state batteries, which has recently signed a deal with Cirtec Medical in America. I read that the technology is potentially cutting edge, but it still sounds a little speculative.

Numbers wise, the company seems to have a very good debt to assets ratio (7-8%), but it’s been burning money hugely in the last year. It is by definition a penny stock right now, which is why I’m nervous- I know they tend to be high risk, high reward. I’ve never dabbled in penny stocks before. I was wondering if anyone with more experience knows of this company, and if they’d be able to share their thoughts on whether this company might be a good investment?

If I go in on this, I accept full responsibility for the decision and won’t blame anyone but myself if it goes badly.

Hi,

It looks an interesting company, but on a quick 5 minute. view, they have a cash runway of a little over 2 years.

I’ve not done any analysis of their cashflows, but it might be good to do a peer group analysis.

Similarly their annual report came out just last Friday, so well worth a read.

I do like their ‘Asset-light licensing model’ - essentially means they are not limited by scale to resell their designs.

It is a more ‘long term’ proposition - they will likely require further funding, and the roadmap is to 2030 at present to reach Giga production scale.

Hi Dougal,

Thanks for the second opinion. I’ll read the report immediately- thanks for pointing it out (I’d gotten so caught up reading opinions online, news stories, researching the technology, looking over financials and such that I had forgotten to check for recent reports). That just shows I need more practice, so I’m glad I didn’t rush in without consulting anybody for help.

You actually reached the same conclusion I had that this is a long term proposition- it’s definitely a legit company rather than a pump and dump scheme by scammers (the fear of running into these is why I have avoided penny stocks in the past), but it’s certainly not a get-rich-quick scheme. Just one question, what do you mean by “peer group analysis”?

Thanks again- that’s really helpful!

Ben / Gunshow

Hi
Obviously I can’t answer for Dougal, but I think what’s meant by peer group analysis is to analyse the competing companies to this one to see how it stacks up against its “peers”. I don’t know enough about this field, but taking house building as an example, you would take Persimmon, Barratt, Taylor Wimpey, Redrow, etc and compare their performances to each other to see both the state of the market and which one(s) are the best performers. That’s how I do it anyway.

Thanks! I’ll research it.