Where next for Quantum dots?

I find watching the progress of some companies and their share prices mesmerising even when I not actually invested. One such company that currently has me transfixed is Nanoco.

Nanoco is currently valued at around £350m. From their blurb on the website :-

"Nanoco partners major R&D and blue-chip industrial organisations in the development of applications incorporating semiconductor nanoparticles, “quantum dots”."

and apparently:-

"Nanoco Technologies is the only manufacturer presently able to supply production quantities of quantum dots which do not use a regulated heavy metal."

which, from what little snippets of information that I have read, appears to open up a huge market for them. In fact they have recently signed a deal with Dow Chemical and from the interims :-

"Our worldwide licensing agreement with The Dow Chemical Company is transformational for Nanoco. It represents a major endorsement of Nanoco's technology, scalability and market potential."

This all sounds very sexy, and of course Nanoco could become massive, perhaps even a multi-billion dollar company.

Will I be buying shares then? Well certainly not at this valuation.

Firstly, I like to have at least a decent grasp of a company's business before I invest, and I have to be honest and admit that semiconductor nanoparticles are not really something within the realm of my understanding. Perhaps I'll regret not carrying out the necessary research?

However, the main reason to stop me buying is the current valuation based on their interim report.

With a market cap. of around £350m, if we gave Nanoco a p/e of say 25 for a growth company then that would imply an operating profit of £14m.

Currently, revenues for the sixth month period (end Jan 13) are approx £2.5m with an operating loss of £1.2m. Net assets come in at £16.3m. Cash and cash equivalents are around £12.5m down from around £15.5m six months ago. Full commercial production with Dow Chemical is anticipated in 2014.

For me, it would take a massive leap of faith to invest in this company, but clearly traders have been pouring in. Good luck to them and I hope it lives up to expectations, but there is no margin of safety that I can see and let's hope that those buying now are not just being suckered by the 'greater fool' method of trading.