J. Marvin Wolff of Paradigm Capital Markets is ready to dig deeper with NanoXplore (NanoXplore Stock Quote, Chart, News, Analysts, Financials TSXV:GRA), maintaining a “Buy” rating and target price of $13.75/share for a projected return of 174 per cent in an update to clients on Monday. Montreal-based NanoXplore deals in graphene, manufacturing and supplying powder for industrial markets and also provides standard and custom graphene-enhanced plastic and composite products to customers in transportation, packaging, electronics, and other industrial sectors. “NanoXplore is aggressively developing end-use markets by using graphene as a performance enhancer for a variety of different plastics with many different end products,” Wolff said. Wolff’s latest analysis comes after NanoXplore released its financial results for the second quarter of its 2022 fiscal year. NanoXplore’s financials were headlined by $18.8 million in revenue and an EPS loss of $0.02/share, roughly in line with the Paradigm Capital forecasts of $19.5 million in revenue with a $0.04/share loss. The revenue projection represents a 7.7 per cent year-over-year increase from the same quarter in 2020, with a bigger piece of its revenue mix coming directly from customers (98 per cent in 2021 vs. 92.9 per cent in 2020) as opposed to other sources. The company ended the quarter with $31.5 million of cash in hand, while posting a gross margin of 9.5 per cent and an EBITDA loss of $2.9 million. NanoXplore’s graphene sales experienced a slight uptick in the quarter, led by Martinrea International, a longtime investor and partner for the company, purchasing $500,000 in graphene and tooling from NanoXplore, up from $400,000 in the previous quarter and in line with what NanoXplore’s customer base has been doing. According to Wolff, company management expects to sign more graphene-based contracts in the next few months, with a number of them carrying a significant scope. With that in mind, the company is looking to ramp up its production, with Wolff noting an expectation for the company to build at least one more graphene production facility at 4,000-tpa similar to its Montreal location, though any new build would likely be in the United States. All told, Wolff expects NanoExplore to be producing 12,000-tpa of graphene by the end of 2023. In addition to the graphene sales, NanoXplore is also involved in a joint venture with Martinrea International called VoltaXplore, with both companies contributing $1 million on January 31 for the buildout of a demonstration plant to produce VoltaXplore’s Si Anode graphene enhanced Li ion electric vehicle batteries, which Wolff forecasts will begin production by the end of February. Given its status in the electric vehicle battery market, VoltaXplore has opted to begin its production with a 2 GW “starter pack” production plant before expanding to become an 8 GW plant. According to Wolff, the approach works as it will only require approximately US$350 million in capital compared to approximately $1.5 billion needed for the full capacity while not needing as significant an EV fleet (40,000 compared to 200,000 in a bigger plant) and being less likely to run afoul of any supply chain issues that could arise. Importantly, the smaller build also allows cash flow to begin two years earlier, in 2024, than it would in a full production plant in 2026. Wolff said VoltaXplore is planning a battery day rollout event, likely in April, saying investors will want to get in on GRA before the event. " will involve a plant tour, the ability to see individual cells and battery packs, a technical discussion with presentation of real-time data results and demonstration of cars powered by VoltaXplore’s batteries," Wolff wrote. Wolff has largely left his financial projections unchanged, maintaining a revenue projection of $85 million in 2022 for an implied year-over-year increase of 17.6 per cent. His 2023 projection is also unchanged at $165.8 million, implying a near doubling at a year-over-year increase of 95.1 per cent. He then introduced a 2024 projection of $307.5 million, suggesting a year-over-year increase of 85.5 per cent. Wolff made a slight change to his 2022 EBITDA projection, as he now projects a loss of $8.5 million compared to the $9.5 million loss he previously projected. He maintains a positive turn in 2023 at $21.1 million for an implied margin of 12.7 per cent, while his new 2024 projection of $122.6 million suggests a much wider margin of 39.9 per cent. From an investor return perspective, Wolff lowered his EPS projection to a loss of $0.12/share for 2022 (previously a $0.10/share loss projection), though he maintained an estimated return of $0.05/share in 2023 before introducing a projection of $0.56/share for 2024. NanoXplore’s shares have produced a 15.8 per cent return over the last 12 months, but have taken a slight nosedive to start 2022 at a 19.3 per cent loss. The company’s stock price has grown steadily since hitting a 52-week low of $3.05/share on March 4, climbing as high as $8.50/share on November 9 before coming back down.