Quantafuel – Sentiment so Negative – Q1 Can Only Surprise to the Upside

There is a major discrepancy between the market sentiment on Quantafuel and the positive signals on progress from the management. We believe Q1 report this Friday could be the turning point for the company fortunes.

Market sentiment on Quantafuel is the most negative since its IPO. No progress Q1 report should surprise no one. Major delays are already priced in. The share price is 80% down from highs one year ago. Analysts and Finansavisen do not like Quantafuel for their over-promising. Badly communicated the February accident did not help either.

At the same time the QFUEL has been achieving the best progress since the IPO. In their last report QFUEL announced that in January 2022 QFUEL processed more plastic than in the whole 2021. At the end of March QFUEL reported reaching of the Proof of Concept that the company was aiming for since the IPO. Despite all of that the share price has decreased materially this year.

As in the Q4 report the most important part of the Q1 report will be what happened after the Q1 end (since the PoC announcement). If QFUEL would announce a materially longer plant run times than one week already announced, and if QFUEL would provide a positive news on additional lines commissioning in the near future, there could be a major re-rating of the sentiment and the share price.

The share price has been hit hard by Finansavisen reporting and analysts reports downgrades

We have been surprised by Finansavisen conduct. We are not sure whether some of their reports fulfill the unbiased reporting standards. A good example could be their reporting of the recent Proof of Concept announcement. On that day there were several analyst updates published. Most of the updates were positive. Finansavisen based their story on just one negative analyst report not including the majority of the positive updates. In our view this is just wrong. A major financial media can not publish just one piece of information when there are other pieces that would make the story balanced. At a later stage Finansavisen probably realized that and added one more paragraph that included an information on one of the positive reports. But that was later after the article was published. By that time most likely most readers already read the story.

We raised a complaint with Finansavisen suggesting that they should review internally whether their own guidelines on unbiased reporting were met. From their replies it did not seem that they were interested in doing so. I hope the company is taking an action on Finansavisen conducts.

Analysts reports contributed to the negative sentiment. After the IPO the analysts were competing who would write the most positive report. Lately they are competing who will write the most negative one. The sentiment completely switched. Once the company will starte delivering the sentiment should switch again.

One illustration on the analysts current negative sentiment. I read most of the analyst reports and spoke to several analysts on QFUEL. In general many value QFUEL in two ways – a DCF of the whole business, and by valuing each plant and than putting a discount rate for a probability the plant would not be build and than discounting such value to the present time.

The valuation of a plant is mostly done based on EV/EBITDA multiple. Most analysts are broadly in line with their EBITDA estimate. They different in the multiples. In our view the large plant (100k tons capacity) that would be 50% owned by a strong industrial partner would achieve 15-20 EV/EBITDA multiple. Scandinavian clean tech champions such as Tomra or NIBE trade at 35-40 EV/EBITDA multiple. We spoke to an analyst that recently published a sell report on QFUEL. He assigned the large plant EV/EBITDA of just 3-4 times…

The analysts burned their fingers when they published bullish reports and the share price plummeted. Once the company starts delivering the sentiment will reverse and so will the analysts reports. I hope the analyst who recently published the sell reports are about to have their fingers burned again.


The market is very negative on QFUEL. That creates a favorable risk reward. The bad news is priced in. The market expects the company to deliver slow progress and delayed projects.

It should be easy to beat the low expectations. Material surprise in the current sentiment could result in a significant rally. The Q1 report this Friday could be the turning point for QFUEL fortunes.

Our family office likes QFUEL story and we like the current risk reward. In the last few weeks we increased our position by one third.

QFUEL webcast details:

A webcast including Q&A will be hosted by the Quantafuel management this Friday at 09:00 CET. The presentation will be held in English.
Link to webcast:

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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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