By Brian Lantier, CFA
OTCQB: NNUP
READ THE FULL NNUP RESEARCH REPORT
Nocopi is leveraging its strong position as a specialty ink provider to build a platform of specialty materials businesses. As a result of its most recent acquisition of Polymeric, the company has materially de-risked its customer concentration while increasing opportunities for future growth.
Nocopi Technologies (OTCQB: NNUP) is evolving from a niche specialty ink company into a broader platform serving the entertainment, screen inks, digital inks, and functional coatings markets. Nocopi has a long operating history linked to its proprietary reactive-ink technologies, which are primarily used by customers in the educational toy market and in the security ink market for authentication and to address grey market diversion. The company completed the first acquisition in May 2026, acquiring Polymeric US, which significantly expands the company's product line-up.
Nocopi intends to replicate this acquisition formula across several related industries. We believe the profile of the combined Nocopi Polymeric business – a company with a strong defensible moat, long-term customer relationships, unique products that are often only available from a single supplier, strong management teams that will stay in place, gross margins above those of standard chemical companies and high return on capital – will be the blueprint that Nocopi will follow when pursuing other acquisitions in the specialty materials markets.
Key management additions offer insight into future plans. The addition of Gregory S. Babe as Executive Director of Operations and Beth Vasy as VP of Growth significantly bolsters Nocopi's operating management capacity in the specialty-materials market. Mr. Babe has had a long successful career in the chemical and material science markets and previously served as the President and CEO of Bayer Corporation with responsibilities for the multi-billion dollar North American operations of Bayer AG.
The acquisition of Polymeric represents a meaningful de-risking of Nocopi's historically concentrated customer base. Investors have expressed concerns in the past that the vast majority of Nocopi's revenues have come from 2-3 customers, even though these revenues are generated under long-term contracts. Polymeric has a much more diversified customer base, with long-term customers and its five largest customers accounting for less than a quarter of total sales. We believe this shift in the company's combined revenue base is not well understood by the market today.
Serial acquirer opportunity: Based on conversations with management, we believe that the Polymeric acquisition is part of a larger strategy to identify strong regional players with long-standing customer relationships and unique product offerings that can be acquired at a reasonable price. If Nocopi can demonstrate an ability to effectively acquire these businesses, retain the existing management, and realize some cost savings through back office integration it could be a very effective strategy in an overlooked market.
Our valuation assumes the company achieves operating efficiencies and can cross-sell products to existing customers. We reach our target valuation of $2.50/share for the company by blending an average specialty chemical valuation of 2.5 Enterprise Value to Revenue in 2027 ($2.25/share) and a forward P/E multiple of 25x next year’s earnings ($2.75/share).
We would encourage investors to read our complete initiation report for full overview of the specialty inks market and the unique offerings from Nocopi.
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