RESEARCH: Weebit Nano Valuation Update $4.75 Per Share

FYI | Jan 15 2021

This story features Weebit Nano Ltd, and other companies. For more info SHARE ANALYSIS: WBT

Pitt Street Research's update on Weebit Nano's valuation has generated an estimated $4.75 per share

By Pitt Street Research

Weebit Nano ((WBT)) recently raised $15m (before costs) through an institutional placement and a Share Purchase Plan (SPP).

Combined with the raise in mid-2020 and assuming a quarterly cash burn of $1.2m, we believe WBT now has a comfortable cash position of around $19m per 1 January 2021.

Following the raise and the fact that there are nearly 44m deep in-the-money options outstanding that can bring in an estimated $20m in funding, we believe the company is now substantially de-risked from a funding point of view.

The current funding situation should allow WBT to not only accelerate the existing development programs around the embedded memory module and the stand-alone device, it should also allow the company to start making some investments into research around neuromorphic computing architecture. This will open up another avenue of opportunities in due course.

Commercialisation: 6 months behind BrainChip

ASX-listed BrainChip ((BRN)) recently signed a commercial license agreement with Japanese semiconductor manufacturer Renesas for BrainChip’s Akida 1.0 neural network IP.

The agreement is for a single use design licence and ongoing royalties based on units sold. In addition, there is an implementation support fee, also known as non-recurring engineering (NRE) fees.

We believe this agreement is quite standard and typical for the semiconductor industry, and any license deal WBT were to make would likely be very similar in nature. WBT recently reaffirmed that it expects to ink its first commercial deal by mid-2021, which would put it around 6 months behind BrainChip.

Valuation of $4.75 per share

When valuing WBT we have taken the same approach that we took when valuing BrainChip at $0.43 in mid-2019 when it was trading at $0.04, i.e. we believe the company should be valued in line with what the industry is willing to pay for similar semiconductor IP companies.

Given the expectation of WBT being able to sign a commercial deal for the embedded ReRAM module by mid-2021, we believe the company should be valued around $750m, or $4.75 per share on a fully diluted basis.

Please see page 4 (of the report attached) for an overview of key investment risks.

Disclosure: Pitt Street Research directors own shares in Weebit Nano Ltd.

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