I had an opportunity to join a call with Quantafuel management today. The participants were Dr Lach and the CFO Kristian Flatten:
- Dr. Lach joined Quantafuel from BASF this year. He did most of the talking. He is a brilliant mind, very smart and very knowledgeable. He comes out like a natural leader. He would be an ideal CEO for Quantafuel in my view.
- While Kjetil (previous CEO) was an overpromise and underdeliver CEO, Dr. Lach is the solid German – underpromise and overdeliver kind a guy.
- He confirmed that Kjetil wanted to free his hands for other projects for some time. The plan was for Kjetil to leave in mid year after Skive one line continuing production milestone achieved. Kjetil agreed with the board, that he would leave despite Skive still in progress. I understand from them, that there is no more story to this.
- Dr. Lach reconfirm the production milestones defined in the press release published at the end of June. The Skive full production target on all lines has been postponed from Q3 to Q4. In my view it is a delay, that is not material for the longer term value of the company.
- We discussed output prices for which Quantafuel sells its products to BASF. The price is now around USD 1000 per ton. The price reflects that when the contract with BASF was negotiated, the oil prices were much lower than they are today. The contract will be renegotiated at some point and Quantafuel expects a price improvement.
- We also discussed, whether there will be enough plastic for Quantafuel to process. Dr. Lach explained, that Europe produces 60 million tons of plastic and produces 20 million tons of plastic waste. Out of this 15 million tons is suitable for chemical recycling. Skive is the largest chemical recycling plant in the world. Its capacity is 2O thousand tons per year. You can make a calculation, how many Skive size plants are now needed in Europe.
- Quantfuel contemplates listing on the main market in Oslo. At the moment most foreigners can not buy Quantafuel shares in Oslo, as most online platforms and smaller brokers do not allow purchases of shares listed on Euronext Growth market. The listing on the main market would expand investor universe outside Nordics, which would broaden the investor universe, increase liquidity and help the share price. Foreigners can buy the German listing, but that is not very liquid and therefore it is not the preferred option. We were not able to get a grip on the timing of this. It is my impression that it is rather in the coming months than weeks.
- The next catalyst will most likely be appointment of the permanent CEO and further details that should be published latest during the Q2 call scheduled for 31.8.
- In my view the market correction of around 20% is hard to understand. After the call I spoke to my Norweigan broker. They are trying to buy the stock for their clients, but there is very few sellers at these price levels. That is an encouraging sign, that the share price may reached a bottom.
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Other opportunities for further research:
- Biovica. I recommend reading the below article. It was published yesterday. Its publication caused the share price move by 13.4%. My base case is, that the share price should double by September launch of its novel cancer test in the US.
- Linkfire. It is a recent IPO listed in Stockholm. It is a play on growth of music streaming and in the next phase movie streaming. I am long and very bullish Linkfire. I will publish an article on Linkfire in next two weeks.
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