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WIKI ANALYSIS
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Bioplastics possess a less volatile price structure versus petrochemical based plastics as feedstocks to manufacture renewable plastic are plentiful. Conventional manufacturing equipment can also be used negating additional capital investments for manufacturers of end-products. From a consumer pricing and demand perspective, brand owners are aware of the preference for products with minimal carbon footprints as they possess an opportunity for premium pricing.
More information can be found on Cereplast’s website at www.cereplast.com
Cereplast, Inc. Snapshot
Symbol CERP
Recent Price (6/9/2010) $5.15
52 Week Range $2.78 - $7.00
Shares Outstanding (as of May 6, 2010) 10.72M
Market Capitalization $55.2M
Enterprise Value $55.1M
Avg. Daily Volume (3 Months) 16k
Financial Highlights
Revenue (Last Twelve Months) $2.74M
Earnings per Share (Last Twelve Months) $ (0.75)
Total Current Assets $2.42M
Total Current Liabilities $1.47M
MANAGEMENT STRATEGY AND PHILOSOPHY
Cereplast’s strategy is multi-faceted and seeks to take market share from traditional petroleum-based plastic products through product attributes, predictable and competitive pricing, forced demand (legislation), and increased end-user demand.
· Target High-Growth Segments with Commercial Products - In 2007 the compostable biodegradable bioplastic market was estimated to be greater than 540 million pounds. BCC Research estimates this market will grow to 1.2 billion pounds by 2012, a compound annual growth rate of 17%.
· Expand Manufacturing Capabilities – Cereplast has completed a new 80 million pound bioplastic production facility in Seymour, Indiana that allows for expansion to a production level of 500 million pounds per annum.
· Strengthen Product Leadership through New Product Development – Through customer interaction and R&D improve the performance and applications of resins.
· Pursue Strategic Alliances – Build strategic partnerships with suppliers, distributors, converters and brand owners to develop and commercialize products.
OPERATING DIVISIONS
Cereplast Compostables® Resins
Renewable, ecologically-sound substitutes for petroleum-based plastics targeting primarily single-use disposables and packaging applications. Commercially introduced in November 2006.
Cereplast Hybrid Resins®
Replaces up to 50% of the petroleum content in conventional plastics with bio-based materials. Hybrid Resins provide a viable alternative for brand owners and converters looking to partially replace petroleum-based resins in durable goods applications. Introduced at the end of 2007 offering two commercial grades.
Cereplast Algae Plastics®
The first grade of resins for commercial use is expected by year-end. Algae based resins represent a breakthrough in industrial technology and have the potential to replace 50% or more of the petroleum content used in traditional plastic resins.
PRIMARY CATALYSTS - Environmental
Growth in biodegradable plastics is driven by several environmental, political and energy policy factors such as:
· Federal government announced policy designating bio-based plastics a preferred purchasing item http://www.biopreferred.gov/Default.aspx
· Worldwide concern over landfill size and waste that takes over 400 years to decompose
· Increasing cost and political nature surrounding the sourcing of petroleum into plastic – plastics consume 8% of annual oil production
· Conventional manufacturing can be used allowing for no additional capital investments to create bioplastics
References
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