ZENYF - Zentek: Late-Stage Bubble To Pop On Misjudged Demand And Alleged Intellectual Property Theft
- Zentek, a long-floundering former junior mining company, claims it formulated an anti-viral ink that may generate billions in the face mask market.
- We uncover that a former partner alleges ZEN stole the ink technology, filing a lawsuit (undisclosed to investors) alleging breach of contract and seeking a permanent injunction and monetary damages.
- ZEN’s management team lacks relevant healthcare experience and education, substantiating the allegations in our view. ZEN’s Head of Science and Research is a pastor with a doctorate in Ministry.
- Anti-viral masks are not new. An established manufacturer of a similar anti-viral coating exited the business reporting a market flooded with competition. Despite 2021E revenue and EBITDA of $63m and $6m respectively, the comparable is valued 60% below trivial-revenue ZEN.
- Given its premium valuation, a weak end market swamped with cheap supply and the undisclosed IP conflict, we believe ZEN is uninvestable.
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Zentek: Late-Stage Bubble To Pop On Misjudged Demand And Alleged Intellectual Property Theft