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Iofina PLC: DEEP DIVE
OVERVIEW

Iofina expects further progress in 2019 after record year as it moves into cannabis market

Chief executive Dr Tom Becker said 2018 was an "exceptional year" and the momentum has continued into early 2019
Iofina plant
OVERVIEW: IOF The Big Picture
Plans for an eighth iodine production site are under way
  • Record results in 2018 

  • Further progress expected in 2019

  • Iofina plans move into US cannabis market 

 

What Iofina does:

Iofina PLC (LON:IOF) is involved in the exploration and production of iodine, iodine speciality chemical derivatives, produced water and natural gas.

The AIM-listed group‘s strategy is to identify, develop, build, own and operate iodine extraction plants currently focused in North America based on its wellhead extraction technology, IOsorb.

It has production operations in the United States, specifically in Kentucky, Montana, and Oklahoma.

The company has complete vertical integration from the production of iodine in the field to the manufacture of the chemical end products derived from iodine to the consumer, and the recycling of iodine using iodinated side-streams from waste chemical processes.

Recently, the group announced move into the production of cannabidiol (CBD) oils in the US. The firm has created a new subsidiary called IofinaEX that will produce CBD oils.

Inflexion points:

  • Iofina delivered a record year in 2018 on the back of increased production at its IOsorb plants in Oklahoma. It reported earnings (EBITDA) of US$2.6mln, 89% higher than the prior year, while revenues climbed 15% to US$24mln.
  • Plans for an eighth iodine production site are under way, with construction expected to begin later this year.
  • Iofina has received conditional approval for a licence to process hemp in Kentucky, which will pave the way for to begin producing CBD oils.
  • The company plans to raise up to £7.5mln through the issue of shares at 16p each. It has also raised gross proceeds through an open offer with existing shareholders. The funds will be used to help pay down debt and progress the development and construction of the IO#8 iodine processing plant.

What the boss says - Dr Tom Becker, chief executive officer

''2018 was an exceptional year and a result of the strategies executed over the last few years by the directors and employees of Iofina," Becker said.

He added: "Over the last few years, by executing cost savings plans, prudent growth, and investing in new products, the group has turned itself around and is performing at its highest level to date.

"This momentum has continued into early 2019 with record Q1 iodine production."

Becker said Iofina intends to continue with this progress. The group is looking to expand its iodine production in 2019 and will continue to invest in new, innovative products, he said. 

"The iodine market is continuing to move in a positive direction, although iodine prices are still below pre-2011 levels. 

"Our focus on everyday execution, coupled with the development and implementation of near-term and long-term growth strategies, are vital to continue with the exceptional progress of the group moving forward."

Blue Sky:

Commenting on Iofina's 2018 results, analysts at ‘house’ broker finnCap said the company’s “laser focus” on costs and efficiency improvements “should continue to pay dividends”, with the projected increase in iodine prices likely to amplify the benefits.

The broker added that Iofina’s recently established cannabinoid division, IofinaEX, was “a natural fit” as its current iodine production used many of the same processes required to extract the cannabis-derived chemicals.

“Iofina also has operations in Montana, Colorado and Kentucky, the top three regions for hemp production in the US. Diversification into synergistic, high-growth new areas can be no bad thing as long as it doesn’t distract from the progress being made in its core Resource and Chemical divisions”.

finnCap has Iofina pegged with a 34p target price.

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