What he believes to be the company’s largest client win ever has Cantor Fitzgerald Canada analyst Ralph Garcea feeling bullish about Nanotech Security Corp. (TSXV:NTS).
Yesterday, Nanotech announced that its proprietary colour-shifting optical thin film (OTF) will be used as windowed security thread in banknotes for a unnamed but large Asian country. The company said it could not disclose terms for security reasons, but that the deal is expected to have a “significant” effect on its overall revenue.
“Adding to the recent traction we’ve seen with major international banknote suppliers, having our technology appear on this important newly issued denomination further confirms that our authentication products are a preferred solution for securing currency internationally,” said CEO Doug Blakeway. “Working closely with our customer and Hueck Folien has allowed us to begin high-volume production. We are confident Nanotech will be well positioned to supply this issuing authority with colour-shifting OTF for banknotes for many years to come.”
Garcea says this is a significant win and notes that management says it is seeing traction with other major international banknote suppliers. He notes that on Nanotech’s third quarter conference call, Blakeway responded to a question about contract visibility that the analyst believes pertains to this deal.
“We are looking at near-term, and near-term to us is in the next six to nine months, and in that area, we are looking at an opportunity that on a yearly basis going forward could be somewhere between $18 million and $26 million in supplying materials, and then reaching out above that in somewhere in the area of $50 million to $75 million on a go-forward basis, annualized with this one particular issuing authority,” said Blakeway at the time.
In a research update to clients today, Garcea maintained his “Buy” rating and one-year price target of $2.50 on Nanotech Security Corp., implying a return of 125 per cent at the time of publication.