Summary of Quantafuel bullish research report by fearnley

Fearnely research:

Elliott JOnes is the best analyst on Quantafuel. His bullish research summary below:

1st Operating Revenues at Skive: a Major Statement Made

QFUEL recently announced their 1q21 results, posting first ever operative revenues delivered from BASF for Skive product. Total sales were NOK3.4m (inc. Geminor additional income of NOK1.7m), EBITDA of NOK-30.5m and an adj. net income of NOK39m. Skive guidance for stable production of 2 lines by the end of this quarter is reiterated (a major milestone), whilst capex is held steady. Kristiansund’s chemical
recycling pilot plant has produced first oil, whilst the company’s primary strategic partners remain as supportive as ever. We push back timing of full utilization Skive and Esbjerg, however these revisions are insignificant to long term value. We reiterate Buy, TP of NOK95/sh, with an unchanged investment case but a better entry point.

Skive operations – a major company milestone is hit
QFUEL announced the significant feat of first ever operational revenues at Skive. The company continues to enhance systems to reach stable and continuous production, capex is held steady and guidance of “proof of concept” by the end of this quarter is re-iterated. Furthermore, QFUEL’s second chemical recycling facility in Kristiansund produced first oil
– rounding off an impressive operational quarter for the company.

Partners and further newsflow demonstrates clear support and validation. The company’s existing primary strategic partners (BASF, Vitol, Kirkbi) remain fully supportive in the QFUEL process (despite a recent secondary sale causing the market to potentially think otherwise). Furthermore, recent news including management share purchases and an environmental application acceptance for Esbjerg adds to support for
the stock going forward. Moreover, recent partnerships upstream (Corepla, REMONDIS)
provides even further validation and paves the way for a future rollout across Europe.

Valuation
We maintain our previous valuation methodology and confirm that the near-term estimate revisions are insignificant to long-term value. All valuation drivers are held steady – we hold revenue from feedstock to USD30/tonne, sales price at USD824/tonne and a European capacity rollout of >2m tonnes plastic by 2029. We see a highly attractive
investment proposition, especially at current share price levels.

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