more_reports

Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe

TICKERS: NNE

Clean Energy Solutions Co. Gains Analyst Coverage
Research Report

View Important Disclosures for this Article
Share on Stocktwits

Source:

This U.S. company is developing portable, clean energy microreactors, an area with significant potential over the coming decades, noted a Benchmark Co. report.

Nano Nuclear Energy Inc. (NNE:NASDAQ) caught the eye of analyst Michael Legg at The Benchmark Co., who initiated coverage on it with a Buy rating and a US$15 per share price target, he reported in a June 14 research note. The energy company is trading now at about US$7.07 per share, meaning the potential return for investors now is 112%.

"[The company] is positioned at the forefront of the emerging nuclear small modular reactor (SMR) energy movement driven by climate change mandates and government incentives that position carbon neutral energy generation center stage," Legg wrote. "We believe the majority of new reactor growth will come from SMRs."

In his report, Legg made a case for the company as an attractive investment.

Four lines of business

Based in New York, Nano Nuclear is developing portable nuclear SMRs, or microreactors, for commercialization and building out a related supply chain, including uranium mining, uranium fuel fabrication, fuel delivery to end users, and nuclear power consulting, noted the analyst.

"[The company's] current focus on four key areas — original equipment manufacturing, fuel, fuel transport, and consulting — provide a diversified opportunity to invest in advanced nuclear technologies positioned for significant long-term growth over the coming decades," commented Legg.

Favorable market opportunity

The company is pursuing these objectives at the right time, Legg wrote. Despite increased electricity consumption over the past 30 years, nuclear capacity in the U.S. has stagnated. Further, 198 countries, at COP28 last December, officially called for a tripling of nuclear

capacity by 2050 globally, taking it to 1,200 gigawatts electric (1,200 GWe) from the current 400 GWe. Also, by 2050, all large-scale, legacy pressurized water and boiling water reactors will be more than 60 years old and need replacing.

Each of Nano Nuclear's microreactors in development, ODIN, a low-pressure coolant reactor, and ZEUS, a solid core battery reactor, delivers about 1.5 megawatts electric and can power 1,000 homes for 20 years.

"Given the nascent level of SMRs deployed today, we believe NANO Nuclear has a first-mover advantage," wrote Legg.

Timeline to profitability

First shipping of ODIN and ZEUS is slated for 2029, at which time, Legg predicted, the company will begin generating meaningful revenue. High-assay, low-enriched uranium, or HALEU, fuel delivery is on track for 2025 and commissioning of fuel fabrication, in 2027.

Legg estimated Nano Nuclear's microreactor line of business could generate about a 40% gross margin maximum in the long term after which it would "steadily decline in price as economies of scale and operating efficiencies are incorporated." Fuel fabrication could yield a 50% gross margin and fuel transportation, a 35% gross margin.

Sources of financing

To get an SMR manufacturing facility up and running, the company will need about US$200 million (US$200M) in capex, Legg estimated and noted it likely will be able to obtain capital from various governmental sources.

These include the U.S. Department of Energy (DOE) and the initiative in the Inflation Reduction Act to fund advanced nuclear fuels.

Strong team inside and out

Another key element of Nano Nuclear, the analyst noted, is its stellar technical team, experienced management, high-profile advisory board, partners such as the University of Cambridge and the University of California—Berkeley and connections within federal agencies like the DOE.

To name a few of the management team, Jay Yu founded Nano Nuclear and is its executive chairman and president. He is an entrepreneur, investor and corporate adviser, with 16 years of capital markets experience on Wall Street. For Nano Nuclear, his responsibilities include corporate structuring, capital financings, executive level recruitment, governmental relationships and international brand growth.

James Walker, a nuclear physicist, is the chief executive officer, head of nuclear reactor development, and a board member. His experience includes being the project lead and manager behind the recent construction of a nuclear power plant for Rolls-Royce Holdings Plc.

Likely stock boosters

Some of the expected catalysts for Nano Nuclear's stock, Legg wrote, are operational progress and advancement of its platform, including additional partnerships, licenses, government grants and/or other nondilutive capital. Other catalysts are continuing education about, acceptance of and demand for nuclear energy as viable power source and a needed one for current and future clean energy initiatives.

Nano Nuclear went public on May 10, 2024. Its market cap is US$205M.


Want to be the first to know about interesting Clean Energy investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. Subscribe

Important Disclosures:

  1. Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
  2.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

For additional disclosures, please click here.

Disclosures for Benchmark, Nano Nuclear Energy Inc., June 14, 2024

Analyst Certification The Benchmark Company, LLC (“Benchmark”) analyst(s) whose name(s) appears on the front page of this research report certifies that the recommendations and opinions expressed herein accurately reflect the research analyst's personal views about any and all of the subject securities or issues discussed herein. Furthermore, no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst(s) in this research report.

Benchmark Disclosures as of June 14, 2024

search Disclosure Legend 1. In the past 12 months, Benchmark and its affiliates have received compensation for investment banking services from the subject company. 2. In the past 12 months, Benchmark and its affiliates have managed or co-managed a public offering of securities for the subject company. 3. Benchmark and its affiliates expect to receive or intend to seek compensation for investment banking services from the subject company in the next three months

Investment Risk Risks include the inability to source capital and fund NNE's buildout, the need to secure government permits related to nuclear power, loss of key management, unproven technologies at scale, larger well financed competition, and unforeseen regulations. 

Valuation Methodology Our target price of $39 is based on our NPV analysis built out to 2042 utilizing a 25% discount rate. Our share count increases to 55mm shares from 29mm today, factoring in equity raises over the next 5 years. Should the company receive government grants, our share count assumptions could prove conservative. We believe the stock will benefit from increased knowledge and proliferation of demand for SMRs as safety and use cases gain public acceptance as climate change initiatives favor emission free energy and see such as key catalysts for the stock alongside continued operational progress.

General Disclosures The Benchmark Company, LLC. (“Benchmark” or “the Firm”) compensates research analysts, like other Firm employees, based on the Firm’s overall revenue and profitability, which includes revenues from the Firm’s institutional sales, trading, and investment banking departments. No portion of the analyst’s compensation is based on a specific banking transaction. Analyst compensation is based upon a variety of factors, including the quality of analysis, performance of recommendations and overall service to the Firm’s institutional clients. 

This publication does not constitute an offer or solicitation of any transaction in any securities referred to herein. Ratings that use the “Speculative” risk qualifier are considered higher risk. Any recommendation contained herein may not be suitable for all investors. The Benchmark Company, LLC makes every effort to use reliable, comprehensive information, but we make no representation that it is accurate or complete. We have no obligation to disclose when information in this report changes apart from when we intend to discontinue research coverage of a subject company. Although the information contained in the subject report has been obtained from sources, we believe to be reliable, its accuracy and completeness cannot be guaranteed. This publication and any recommendation contained herein speak only as of the date hereof and are subject to change without notice. The Benchmark Company, LLC and its affiliated companies and employees shall have no obligation to update or amend any information herein. This publication is being furnished to you for informational purposes only and on the condition that it will not form a primary basis for any investment decision. Each investor must make its own determination of the appropriateness of an investment in any securities referred to herein based on the legal, tax and accounting considerations applicable to such investor and its own investment strategy. By virtue of this publication, none of The Benchmark Company, LLC or any of its employees shall be responsible for any investment decision. This report may discuss numerous securities, some of which may not be qualified for sale in certain states and may therefore not be offered to investors in such states. The “Recent Price” stated on the cover page reflects the nearest closing price prior to the date of publication. For additional disclosure information regarding the companies in this report, please contact The Benchmark Company, LLC, 150 East 58th Street, New York, NY 10155, 212-312-6770. The Benchmark Company, LLC is not in any way affiliated with or endorsed by the Menlo Park, California venture capital firm Benchmark Capital. This report may not be reproduced, distributed, or published without the prior consent of The Benchmark Company, LLC. Copyright © 2024. All rights reserved by The Benchmark Company, LLC.





Want to read more about Clean Energy investment ideas?
Get Our Streetwise Reports' Resources Report Newsletter Free and be the first to know!

A valid email address is required to subscribe