Few Public Plays to Gain Exposure To A Rapidly Growing Sector Destined for Leverage
There is a tremendous opportunity for investors in a growing segment of the largest material market in the world, the plastics market! However, the industry is drastically changing in the developed world as government policies and consumers are pressuring manufacturers to shift towards eco-friendly packaging and a focus on switching from fossil fuels to renewable resources.
Companies are shifting to alternative forms of packaging using renewable bio-mass materials, making “bioplastics”. Companies like Coca-Cola® have introduced their ‘PlantBottle’ made up of 30% plant-based materials. With manufacturers shifting from traditional plastics to bioplastics, analysts are expecting the bioplastic market to grow at CAGRs of 17.5% or more between 2016-2020.
But what does this equate to? An industry that will expand globally to $20 billion by 2019 & $324 billion by 2030.
With analysts predicting massive growth in the bioplastic sector, there aren’t many publicly traded companies for investors to consider. Here are three companies: BioAmber (BIOA), Metabolix (MBLX), and Solegear Bioplastics (SGB.V).
BioAmber (BIOA) is an industrial biotechnology company with a proprietary technology platform that uses chemical catalysis to convert renewable feedstocks into chemicals that are replacements for petroleum-derived chemicals. BIOA sells its bio-based chemicals directly to its customers and commercial partners, as well as indirectly through a distributor in the Asia-Pacific region. BioAmber has a proprietary process for producing succinic acid which can be used as building block materials to make a broad range of everyday products such as paints and coatings, adhesives, sealants, artificial leathers, food and flavor additives, cosmetics and personal care products. BioAmber is focused on reducing the material costs of bioplastics for all producers in the plastics industry.
Metabolix, Inc. (MBLX) is developing and commercializing speciality high-performance biopolymers and based on a PHA platform (polyhydroxyalkanoates) that are an environmentally sustainable alternative to petroleum-based plastics. The company offers three lines of products – biopolymers, bio-based chemicals and crop yield technologies. Their biopolymers and bio-based chemicals are focused on delivering building blocks and additives to significantly increase performance and functional biodegradation for vast applications within the plastics industry.
Solegear Bioplastics (SGB.V) has developed proprietary high-performance bioplastics that it customizes to create finished consumer products and packaging. The company partners directly with major brands and retailers to identify existing packaging and products that can be converted to bio-based materials. With partnerships announced with companies like Dr Scholl’s®, TOPS Products Canada & NEOPERL, Inc., Solegear takes a different approach from other bioplastic companies by using an outsourced production model to deliver capital efficiency, lower overall costs and global distribution.
The trends in the bioplastics space are undeniable – compelling growth, a growing share of a massive materials market opportunity (plastics), and margin expansion primarily resulting from technological breakthroughs to drive more efficiencies. If there was ever a win-win investment opportunity still in its early stages, it would be bioplastics.
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