The deal is evidence that YPB has established a first-mover advantage in what is a huge addressable market.

YPB Group (ASX:YPB) announced another global supply contract this morning, as the commercial pipeline for its leading anti-counterfeit technology continues to grow.

The contract is with Kingtons Technology Co Ltd, an electronic cigarette and vaporiser technology manufacturer based in Shenzhen, China.

Under the terms of the deal, YPB will apply its T2 tracer nano material directly into Kingtons’ hardware to provide the “highest level of anti-counterfeit protection”, the company said.

The three-year contract is valued at $181,000, and highlights the potential of an expanded addressable market in a sector that’s expected to be worth more than $US100bn annually by 2028.

Shares in YPB jumped by around 50% in morning trade, to 0.3c.

 

First-mover advantage

YPB is currently the “only licensed company in China that supplies proprietary invisible tracers”, it said today.

In that context, it has a key advantage in one of the world’s largest markets for e-cigarette products – a sector when anti-counterfeit technology provides an essential value-add to ensure safety and useability.

Research from Kingtons shows that there are around 170,000 e-cigarette manufacturers in China alone.

YPB’s technology will be “incorporated by Kingtons in their e-cigarette and vape hardware, moulded into the actual product, to allow easy detection of fake hardware by YPB’s T2 scanner in the supply chain or at retail outlets,” the company said.

The deal with Kingtons is a take-or-pay contract, meaning that for each 12-month period, Kingtons must acquire RMB280,000 (~$56,000) of tracer master batch and RMB10,000 (~$2,000) of YPB T2 scanners.

For each annual period, if the minimum amount hasn’t been reached the quantity must be purchased within seven days of the end of the year (excluding the first year which has a three-month grace period).

“The payment method is by pre-payment prior to the goods being dispatched,” YPB said.

The company’s latest deal continues a strong period of operational momentum, after it flagged cash receipts of $208,000 in the September quarter – a 73% increase from the June quarter.

During the quarter YPB also announced the first paid commercial trial for MotifMicro1 – its market-leading anti-counterfeit technology that proves authenticity through mobile phone scanning.

This article was developed in collaboration with YPB Group, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

 

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