Quantafuel – Broker Comments on QFUEL Reconfirmation of PoC around Year End

Quantafuel announced today, that the newly installed equipment is performing as expected, and that the aim to reach proof-of concept (PoC) around YE’21 is maintained.

This is very bullish. The management is coming out to reconfirm their target that may be only days ahead. It has two implications in our view:

  • reaching of Proof of Concept is a major catalyst for the stock. Management confirms we are just days from reaching this.
  • the management indicates they want to communicate actively. It is an indication that they care about the share price and its shareholders.

Both of the above are very good news for QFUEL shareholders.

I include below what brokers wrote today about the announcement:

Pareto Securities summary:

QFUEL – Quantafuel announces that the newly installed equipment is performing as expected, that it has had several days with production at applicable load volumes, and that the aim to reach proof-of concept (PoC) around YE’21 is maintained. The Proof of Concept is only linked to running one of the four lines with commercial plastics at high load with high availability for a prolonged duration (apparently 2 weeks). Further, the company restates the 2022 targets for Skive of processing of 12k tonnes of plastics, ending the year at a full capacity of 20k tonnes. In sum, it is positive that the company seems confident in reaching proof-of-concept in short time. As we have highlighted earlier, with several delays and changes to plant assumptions, our target price is currently under review

ABG Sundal Collier take:

Quantafuel has transitioned to production mode in Skive
Quantafuel (B) is out with a status update on Skive this morning. It states it has successfully completed installation and commissioning of the new equipment. It has been feeding plastics to the first of four production lines at high load for several days in a manner consistent with meeting proof-of-concept around YE as previously guided. It reports that the new equipment is performing as intended. It is now conducting repairs to the shredder and will restart production shortly. Quantafuel reiterates all guidance parameters. We consider it positive that QFUEL is progressing towards proof-of-concept as previously guided, and find it comforting that the company states that the new equipment is performing as planned.

OUR TAKE – valuation

There is a positive news from QFUEL on weekly basis. Last week we had an announcement on Kristianslund, one week before that it was an announcement on new partnership.

If you look at past price performance, when the market expected proof of concept, the share price jumped above 70 NOK. The share price had a nice move this morning, but there is still more than 130% upside to the previously reached 70NOK. If the company delivers, the share price should continue moving strongly. Todays share price move is a small one relative what the company could experience if the PoC is reached.

The company is very active in preparing new plant projects. Once the proof of concept is achieved, there should be a lot of traction – there will be four large plants under construction at the same time. There should be a lot of positive newsflow.

OUR TAKE – valuation

If you look at past price performance, when the market expected proof of concept, the share price traded above 70 NOK. Today the share price is around 30 NOK. There is more than 130% upside to the previously reached 70NOK. If the company delivers, the share price should continue moving strongly, as there is a lot of positive news in the pipeline.

Once the proof of concept is achieved, there should be a lot of traction – there will be four large plants under construction at the same time. There should be a lot of positive newsflow.

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Disclosure: 

The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.

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