One Equity Research is initiating coverage on Integral Technologies (OTCQB: ITKG) as a unique way to capture potential upside from the global lightweighting shift, estimated at $300 Billion annually.
ITKG makes a carbon-fiber reinforced plastic material that is electrically-conductive and could displace heavier metal components like steel, copper and aluminum used in casings, for instance in automobiles. Reducing weight is the most pragmatic way for manufacturers to meet fuel economy and emission mandates that will otherwise trigger stiff penalties (see full report for details).
According to McKinsey & Co., the auto industry consumes over 90% of the lightweight materials used in automotive, aviation and wind industries combined. ITKG is well-positioned through partnerships with Hanwha, Delphi Automotive, BASF and East Penn, which should help catalyze meaningful product adoption.
Currently, we see upside of 75%+ for ITKG investors, based on a conservative assumption for revenues in calendar 2016. The opportunity is vast and any meaningful market penetration would cause a sharp revision to our estimates.
We believe a successful outcome for Electriplast, ITKG's composite plastic, would mirror product supplier stories like Universal Display (NASDAQ: OLED), whose organic light emitting diode ("OLED") technology is behind the new wave of high-definition flat screen displays from Samsung, LG, Sony et al., or NXP Semiconductors (NASDAQ: NXPI) whose suite of radio frequency products are an integral part of Apple’s (NASDAQ: AAPL) iPhone and Google (NASDAQ: GOOG) devices, among others. The two technology suppliers’ performance is shown, below.
ITKG Performance Could Mirror Technology Suppliers NXP, Universal Display
While there are other companies that will be beneficiaries of one of the largest supply-chain shifts in the last century, ITKG stands as one of few "pure-plays" and that with the most explosive earnings growth potential (on a relative basis).
Read our full initiation report (CLICK HERE) to understand how BMW, Ford, GM, Tesla, and other major vehicle manufacturers are creating an insatiable demand for novel, lightweight materials like ITKG's Electriplast and why we expect this could accrete as upside for ITKG shareholders.
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Legal Disclaimer: This research note has been prepared by One Equity Research, LLC on behalf of a third party, as part of research coverage services. One Equity Research expects to be compensated up to twenty thousand dollars and may receive additional compensation for ongoing coverage of Integral Technologies. This research note is not an offer or solicitation to buy or sell the securities of Integral Technologies. The report is for information purposes only, and is not intended to (and is provided explicitly on the condition that it not) be used as the sole basis to make any investment decision. Investors should make their own determinations whether an investment in any particular security is consistent with their investment objectives, risk tolerance, and financial situation.