Tuesday, May 21, 2013

Organic Photovoltaic Gumption

The last post focused on the technological accomplishments of Heliatek GmbH, a developer of organic photovoltaic cells.  Heliatek claims to have set a record 12.0% conversion efficiency with the company’s organic solar cells.  It is all about materials processing. To make its organic solar films Heliatek uses vacuum technologies to deposit oligomers in a roll-to-roll process.  While I do not want to take anything away from Heliatek’s accomplishments, these are well established, proven technologies and processes.  What is more the small, developmental stage company is getting help from a much larger player in the specialty chemicals world.

BASF SE (BAS.DE) is specialty chemicals supplier with a broad product line serving a range of customers.  BASF has done well supplying producers of conventional silicon-based solar cells with electronic chemicals for etching, cutting and doping the silicon wafer.  It also has products for the solar cell production step for heat load reduction and device packaging.

BASF Light Absorbing Colorant
BASF knows a bit about light absorption from its experience in creating and selling colorants.  This is making it possible for BASF to get involved with organic solar cells as well.  The company is developing dyes that lead to the most intensive solar absorption in organic materials.  BASF produced a wonderful video on its organic solar cell initiative that also provides a great background on the differences between conventional silicon-based solar cells and organic solar cells.  The economic forces that are driving investors to organic technologies is also succinctly explained.
BASF has affiliated with upstarts as well as established companies to get a piece of the organic solar cell market.  Besides Heliatek, BASF is teamed with Daimler to jointly developed a concept car, for which transparent organic solar cells have been integrated into the roof.  BASF is also attempting to develop materials for building lighting and power that can be used in low light conditions.

BASF is the largest chemicals producer in the world and boasts a market capitalization near US$89 billion.  Thus it is a large cap that does not represent a play on organic photovoltaic potential.    I think BASF collaborations suggest this is one of the companies that has the gumption to apply its materials knowhow to organic photovoltaic.  That usually means a significant share once the market is developed. 

BASF stock trades on the German exchange and several other European exchanges, but not in the U.S.  It trades as a multiple of 15.0 times trailing earnings and 14.0 times 2013 earnings.  Thus there is not a great deal of implied upside in the current price.  That said, a generous dividend history means the stock yields near 3.6%, a rate that is quite appealing for U.S. and European investors alike.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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