What's the story here? I like the sound of the products - biodegradable packaging aimed at food sellers and other retailers must be a growth area. This is clearly evidenced by the 120% growth in sales revenue (to £12.2m) in the first 9 months of the year, compared with the same period last year. Sales of bioplastics, made directly by Stanelco, are up 450%.
It's opening an office in the US aimed at promoting its range of bioplastics, largely derived from corn or potato starches rather than petrochemicals
http://packagingnews.co.uk/business/news/860894/Stanelco-sales-increase-120/
But why isn't it making any money??? "The Group’s net loss reduced to £1.0m from £3.7m in the same period last year whilst the Group made a loss from operations of £1.6m compared with a loss of £3.7m for the six months to 30 June 2007 and £1.9m for the six months to 31 December 2007 (the same period last year included £2.0m of exceptional items)".
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I guess the losses are explained by the fact that it's still developing and commercialising its products in a market which is still emerging..."The first signs of factors changing the nature of and driving the growth of the bioplastics market are emerging. Initial participants were brand-owner/converters, characterised as innovators/early adopters who saw a business opportunity and began experimentation early. Now, more mature players are participating in the supply chain as the potential for sustained growth is appreciated. The social ethos driving the market is shifting from ‘bio-degradability’ and end-of-life concerns to the ‘sustainability’ of biomass sourced plastics in the world of higher oil prices" - http://www.stanelcoplc.com/pdf/Stanelco-Interim-Report-August2008.pdf
What's the timing to breakeven though? Will they burn through that £6.9m of cash at end September?
The bull case was that SEO's RF tray lidding technology would be applied to vast numbers of products and looking at the share price chart, clearly investors got rather wrapped up in the idea... with a market cap that went to nosebleed territory in 2005... must have been fun for shareholders. It looks like it was a classic ramping stock.