Cibus Nordic Real Estate is very solid company with great share price performance.
The company is down 20% in last five days.
The decline was most likely caused by increasing interest rates and probably rumored capital increase. The capital increase happened yesterday after close.
The company announced acquisition of its first property in Denmark and the capital increase is providing funding.
The share is up 1% so far today. I believe the company is well positioned for re-rating. I am long Cibus.
Let´s Brainstorm on Russia/Ukraine
I am looking for ideas how to invest into disruptions caused by the Russia invasion into Ukraine. Any ideas welcome – please place below the article
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.
I wrote here several times about CoolCo- a spin off of 8 LNG tankers by Golar. Today, there were two articles that support the story. It is reflected in the share price, which increased to 85 NOK. My price target is 120 NOK.
Soaring LNG Demand Creates Traffic Jam At Gulf Of Mexico Ports
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.
Pareto summary: With energy security becoming the new buzzword after the tragic Ukraine- invasion, modern LNG carriers are set to benefit. CoolCo has already secured one timecharter at a stellar rate since its recent inception – and we expect more to come. Ofer and Trøim have created a vehicle that provides plenty of leverage both operationally and financially – and having traded down since the IPO with initiate coverage with TP of 100 and ~25% upside
My take: I wrote about CoolCo about two weeks ago. I suggested CoolCo as a qtrading idea for the case situation in Ukraine escalates further and gas supplies get interrupted. This did not happen yet, CoolCo is up only a few % since I wrote about it. I belive the idea still stands. The company is progressing well, charter for usd120k per day was confirmed last week. The company should rerate. And if there is a gas interruption, it will skyrocket. Great risk reward in my view.
Pareto front page summary:
Clean play on TFDE-vessels, plenty of leverage… With 8x LNGCs built in 2013/14, Golar spin-off CoolCo has most of its fleet exposed to the spot markets in the coming years – and already secured some stellar charters. Focus will be on growth, and we expect accretive transactions to consolidate the fragmented market. The set-up is clean and transparent, with a cash break-even of ~USD 50,000/day and ambition to pay out the ‘majority of free cashflow’ to shareholders. Under our conservative USD 70,000/day market for 2023 this means a yield of ~7% – but clearly room for more.
…to a market that is becoming increasingly political The LNGC market has seen higher and higher peaks over the past years, with global gas prices continuing their wild swings. The tragic invasion of Ukraine has put European energy security in the spotlight, with the EU targeting a rapid substitution of at least 35mtpa of LNG equivalent. The LNG market is already tight – providing plenty of arbitrage out of the US Gulf – and higher European prices to soak up cargoes from as far as Australia could mean that the current LNGC orderbook goes from a small 2023/24 concern – to not sufficient. The longer-term fundamentals are in any case appealing, with shipyard inflation full orderbooks making us doubt that we will have enough ships for 2025/26 – setting the stage for a true super-cycle. We will see more US export projects sanctioned – projects that are more tonne-mile intensive than others.
BUY TP NOK 100 – bull-case in ‘22/23 adds another NOK 15 We expect COOL to be an active consolidator and grow its fleet substantially in the years to come. Trading above our conservative NAV any ‘ship-for-share’ transaction should be accretive. We find EV/EBITDA 2023e of 6x attractive, with ample upside if more fixtures are secured. Our TP of NOK 100 is derived from a YE’23 NAV, and would increase to NOK 115 if H2’22 – 2023 averages USD 100,000/day, and another NOK 25 if we raise asset values by 10%. CoolCo is the leveraged bet on the near-term LNGC market – a bet we find intriguing given the political and strategic importance of LNG infrastructure now.
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.
The main quotes from Biovica CEO Anders Rylander 5 minute interview with Redeye Research yesterday are below.
We got a very positive FDA feedback in February. That was very positive, because no more issues in the clinical area and only on study that we need to complement.
We will redo the study that we have done before. We are already working on it and the May deadline (for FDA response submission) we believe we should be able to meet.
We have performed the production of the samples and now we are doing the additional tests the FDA has requested.
This is not about new client test. It is about precision test we have done before – this is just in slightly different format with additional samples.
We are confident we can reproduce samples we have done in the past
We are confident we will meet the deadline
This should be the end of FDA review phase. After submission it generally takes 30-60 days for FDA to issue the clearance under normal conditions.
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.
Fearnley Securities: QFUEL announced this morning that repairment of the burner chambers of the two first lines have been completed and tested for production. Both lines have converted plastic waste at a high load after repair completion, and the plant is gradually returning to production.
The timing is in line with QFUEL’s target (announced early February) to resume production in the two lines by mid-March. Going forward, focus remains on increasing uptime and capacity in the production lines to reach Proof-of-Concept.
ABG Sundal Collier:
Quantafuel is back in production on SkiveABG Sundal Collier acted as joint bookrunner in the NOK 400m private placement in Quantafuel QFUEL (B) announced this morning that it has completed the repair work for the first two production lines in Skive. Both lines have been tested in production and have converted plastics at high load after the repair. The plant is gradually returning to production now. This is in line with the comments from the Q4 report end February where it stated that both lines were expected operational by mid-March. It is positive to see that Skive is now operational.
Note on valuation
Before the announcement on the production interruption QFUEL traded above 25 NOK. On the announcement it went down to around 15 NOK. Today the stock gained back to 20 NOK. We are still 20% below the announcement.
When the market believed that Proof of Concept is eminent, the stock was trading close to 80 NOK. Based on all the conversations we had we believe that the proof of concept is at max weeks away. There is plenty of upside.
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.
Redeye: The essential Q3 (November-January) feedback is that the FDA process progresses without significant internal or external disruptions. Biovica is on track for submitting supplementary results in May, and the company is also on track to secure a likely conclusive subsequent FDA decision in July to August, in our view.
Pareto take on today´s results:
Q3 21/22 (Nov-Jan) report takes – Setting-up own lab in the US
Biovica’s Q3 21/22 (Nov-Jan) report was in line with our expectations. The cash burn rate of SEK -14m (-11m) remains increased over last year due to commercialization activities. Cash and cash equivalents at the end of the period amounted to SEK 108m (155), which should last the company into 2H 2023. Biovica will hold a teleconference today at 15:00 CET and in case anything new is mentioned we will follow-up thereafter. While the regulatory delay was long, our view on the product has not changed, we thus reiterate our Buy rating on BIOVIC with a target price of SEK 103.
Last regulatory step As mentioned in our note last month, Biovica is preparing to conduct a lab study which is to validate previous results related to DiviTum material specifications and inter-lot variability. The additional data will be included into the re-submission of the 510(k) submission scheduled for May. The FDA will then approve or reject within 30 days i.e. within June (given the FDA sticks to its timelines which we expect to be the case unless there is a resurgence of COVID-19). Considering the extensive FDA discussions that lay behind this last piece of analytical data to be submitted, we believe that DiviTum has a high chance of approval i.e. the FDA is unlikely to suddenly come up with a new concern.
Own US lab for commercial operations Biovica announced yesterday that the company is establishing its own analytical lab in the US (in San Diego), which allows more direct interactions between Biovica and payers (as the labs are the ones receiving the reimbursement). It also enables a more direct contact with physicians and patients, which are critical interactions to achieve successful sales. With a foreign lab, Biovica’s test might not get the same attention as it does with an in-house one. Furthermore, due to a missing intermediate, Biovica’s margins on DiviTum are increased.
Rede
Redeye Research Summary
The essential Q3 (November-January) feedback is that the FDA process progresses without significant internal or external disruptions. Biovica is on track for submitting supplementary results in May, and the company is also on track to secure a likely conclusive subsequent FDA decision in July to August, in our view.
In the current geopolitical state with logistical and procedural challenges, the Biovica message that the company remains on track to deliver in May is reassuring. It reduces the risk for any near-term delays in our view.
Biovica continues to secure additional scientific support from studies, including test studies, health economy studies, independent studies, and support from credible publications. This is important to ensure post-approval launch support later in 2022 and beyond.
Biovica has also recruited Kendon Richard as head of sales. We can expect Biovica to share sales and marketing material later in the spring and the updated market access and reimbursement strategy. The decision to set up an in-house CLIA Lab (CLIA = The Clinical Laboratory Improvement Amendments) in San Diego is probably part of this process. This lab will be operational during Q3, and it needs to secure FDA and CMS recognition/certification to our understanding. This Biovica lab will process the Divitum test, and it is also likely to collaborate with future clinical, distribution and commercial partners. The strategy will provide Biovica with improved control of the early launch process, including the pricing, reimbursement and future label expansion processes.
The cost base remains contained with a slight increase reflecting the upcoming US launch with SEK 14.4m during Q3, and the financial position is SEK 108m in cash as of the end of January 2022, which is sufficient for the next 12 months.
The next key trigger
Biovica is on track to deliver the supplementary data to FDA in May, and then we can expect FDA feedback and a decision within 30-60 days. The following five to six months will be most decisive for Biovica. The current share price level reflects a very challenging macro environment with geopolitical disturbances. In our view, the current share price also reflects low specific expectations for Biovica when considering the size of the futures market and the scientific support to date. As a result, Biovica represents a very attractive risk-return profile for a pre-revenue company over the next six months. 2022 has the potential to be an exciting year for the company. Our value proposition is a base case value of SEK 95 (Bull SEK 325, Bear SEK 20). A near term update would not trigger any significant change apart from slightly higher market risk, and a corresponding slightly increased discount rate (WACC).
Introduce Research (by ABG)
Q3 Interim report – Launch in US with own CLIA laboratory
SEK 000s
Q3 21/22
Q3 20/21
May-Jan 21/22
May-Jan 20/21
Full year 20/21
Net sales
314
1,376
963
1,759
2,077
Operating profit (loss)
-14,417
-11,062
-40,970
-28,012
-40,181
Profit (loss) for the period
-14,334
-10,909
-40,947
-27,491
-39,482
Earnings per share, after dilution
-0.50
-0.38
-1.44
-0.97
-1.39
Significant events during the third quarter
Article on the DiviTum®TKa Budget Impact Model published in the Journal of Medical Economics.
Three studies with DiviTum®TKa presented at SABCS 2021.
Start of TK IMPACT study at Washington University in St. Louis.
Significant events after the end of the period
Updated timetable for supplementation of the FDA submission.
DiviTum®TKa results from the PYTHIA study published in EJC.
Decision to set up own CLIA laboratory in San Diego, USA.
CEO’s comments In February, just after the end of the quarter, we received feedback from the FDA, which means that we have a plan for our continued application process. Now, with the FDA’s feedback, we know what information we need to supply in order to answer their last remaining question and we feel certain that we will be able to provide them with the information they are asking for.
We believe that the interactive process we have had with the FDA will be to our advantage during their review (once we have submitted the supplement) since we will have answered all questions that arose during the process.
Our work to provide the information requested by the FDA has progressed well. Hence, we feel confident that we can reach the previously communicated goal to provide FDA with the information during May 2022.
During the quarter, we also continued our preparations for the upcoming launch. Warren Cresswell, President of the Americas, now will be joined by Kendon Richard, who has been recruited as the new Head of Sales. Kendon has more than 25 years of experience in sales. Most recently, he held the position of Senior Director National Sales at the diagnostics company, Prometheus Laboratories, where he built up and developed the sales organization. He also has many years of experience working with sales, primarily at Procter & Gamble.
By building up the organization and processes, we will be prepared to start selling as soon as possible after we receive market approval. Under the surface, much work is being done to prepare our marketing and sales material and we hope to be able to present our new material later this spring. We are also working with the plan for market access and reimbursement.
One important decision that our Board of Directors has made is to offer DiviTum®TKa in the USA by setting up a wholly-owned laboratory in San Diego. It will serve the entire country and there are major benefits associated with this solution. It enables us to have direct contact with our customers and payers, along with better circumstances for being able to establish a price for DiviTum®TKa that reflects the significant benefits it can offer to both payers and patients. We will also improve our margins with this solution.
With our laboratory, we can also build a biobank of patient samples that we will be able to use in the development of new products. It will enable us to more quickly add new biomarkers for new applications and improved performance. It will become a valuable asset to the company.
We are expecting to receive the CLIA laboratory certification during the third quarter 2022.
One important cornerstone for a successful launch is strong scientific support. It was therefore very encouraging to see recognition that DiviTum®TKa received during the last quarter. For example, the results from three studies with DiviTum®TKa, including a budget impact model, were presented at the world’s largest breast cancer conference, San Antonio Breast Cancer Symposium (SABCS), in December. The results of the budget impact model were also published in the Journal of Medical Economics and subsequent to the end of the quarter, positive results from the PYTHIA study were published in the European Journal of Cancer (EJC).
Although publications of prior study results are important, we must continue our efforts to strengthen the clinical evidence for DiviTum®TKa even more by initiating and supporting more studies. One example is the TK IMPACT study, which began during the last quarter. It is an investigator initiated prospective trial at Washington University of St Louis to evaluate the clinical utility of DiviTum®TKa on monitoring practices in the care of metastatic breast cancer patients. The study will examine care over time of 55 patients that will be tested regularly with DiviTum®TKa. Our vision is to change the standard of care in monitoring to easy, quick and safe blood-based TKa testing that benefits patients.
We have an intensive period ahead of us to supplement the last remaining information to the FDA, obtain 510(k) clearance, set up our CLIA laboratory and then launch DiviTum®TKa in the US market. I’m looking forward to it all with great enthusiasm!
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.
This is a third installment on ideas how am I protecting my portfolio against the Russia War against Ukraine. Last week I sold my coal holdings at around 50% gain over two weeks. I bought arm producers last week. I am holding my palladium and shipping positions. I increased substantially my oil holdings in down days.
I strongly oppose what Russia is doing in Ukraine. We have donated to People in Need foundation, that is one of the biggest humanitarian aid distributors in Ukraine. Please consider joining:
https://www.peopleinneed.net/donate/once
We also donated money to Ukraine embassy so that Ukraine can buy arms to defend itself against Russian aggression. Please consider looking at the Ukraine embassy website in your country to help.
In the first installment I wrote about my first trading ideas on Russia war. I bought coal miners JSW and TGA. I sold last week. JSW was excellent trade, bought at average of 40 PLN, sold between 68-75PLN. TGA was good as well. I remain believer in coal (due to EU need to diversify away from Russia gas) and want to reenter the positions on a down day.
I reported on buying mishandled IPO of Coolco, a LNG shipping carrier. The blackout ended today, first research published. More research reports in the coming days. CoolCo should benefit from EU´s diversification of its gas supplies. They will try to get more gas from non-Russian producers. That should help to push the the rates up. Pareto wrote today:
LNGC: Cool Co. rumored to have fixed TFDE for 1Y TC at USD 120k/day Cool Company is rumored (not confirmed) to have chartered out a vessel on a 1Y TC at USD 120k/day to Polish LNG importer PGNiG. COOL has eight 2013 – 15 built TFDEs, which means no matter which vessel (‘Golar Bear’ rumored) the deal would mark a significant step-up from the USD 95k/day brokers were quoting on Friday for TFDEs
CoolCo is trading today at around 81 NOK. My price target is 120-130 NOK.
I bought last two weeks oil positions in AKERBP and Africa Oil. Both in substance an oil plays – speculating on Russia reduced deliveries. I was buying AKERBP around 276-285 NOK and Africa oil at 17.5 NOK. I will be buying more on weakness.
I bought several arm producers last week, namely RTX, KOG, BA, LDO, RHM and LOM. The share prices did not move much, I am 5-10% in profit. The rationale is – Germany already announced doubling of their defense budget. So did Denmark. All EU countries will do. These companies should be the beneficiaries based on my research. I am doing more digging in the area and want to increase my exposure in this area.
After conversations with QFUEL management, brokers and some large investors, I am very bullish QFUEL. For QFUEL war is not positive, so it does not fully fit into this blog post. But I find it very attractive both short term and long term trade, that should work even despite the war.
Last time market believed Proof of Concept was at sight the company was trading above 70 NOK. QFUEL has made a great technological progress since, but trades below 20 NOK. The risk reward is very attractive in my view. I like the CEO bought shares last week. I am in the market too.
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.
Africa Energy Corp. (Nasdaq First North: AEC) an oil and gas company with exploration assets offshore South Africa and Namibia, is pleased to announce that the joint venture partnership for Block 2B offshore South Africa has contracted the Island Innovator semi-submersible rig to drill the Gazania-1 well by October 2022.
Garrett Soden, Africa Energy’s President and CEO, commented, “We are pleased to secure the Island Innovator rig to drill a high-impact oil exploration well this year on Block 2B. The block has significant contingent and prospective resources in shallow water close to shore and includes the A-J1 discovery from 1988 that flowed light sweet crude oil to surface. Gazania-1 will target two large prospects seven kilometers up-dip from A-J1 in the same basin as the recent Venus and Graff discoveries.”
Block 2B is located offshore South Africa in the Orange Basin where both Total and Shell recently announced significant oil and gas discoveries offshore Namibia. The block covers 3,062 square kilometers off the west coast of South Africa 300 kilometers north of Cape Town with water depths ranging from 50 to 200 meters. Oil was discovered and tested by Soekor in the A-J1 borehole drilled in 1988. Thick reservoir sandstones were intersected between 2,985 meters and 3,350 meters. The well was tested and flowed 191 barrels of oil per day of 36-degree API oil from a 10-meter sandstone interval at about 3,250 meters. Significant prospectivity has been identified over the entire A-J graben area using 686 square kilometers of 3D seismic data acquired in 2013.
Africa Energy has a 27.5% participating interest in Block 2B offshore South Africa. Block 2B is operated by a subsidiary of Azinam Limited (“Azinam”), which holds a 50% participating interest. A subsidiary of Panoro Energy ASA holds a 12.5% participating interest with Crown Energy AB indirectly holding the remaining 10%. Subject to completion of a definitive agreement announced on February 8, 2022, Eco (Atlantic) Oil & Gas Ltd. will acquire 100% of Azinam.
Why is this important
Africa Energy in the past traded well in exploration campaigns. I copy below a part of SpareBank research that describes this very well.
Pareto today´s take on the announcement
Rig secured for drilling at Gazania-1 by Oct’22
The partners at Block 2B offshore South Africa has secured the Island Innovator rig to drill the Gazania-1 exploration well by Oct’22. This follows Eco Atlantic’s recent entry into the block and is positive as the previous uncertainty on timing/likelihood of drilling now is removed. With an unrisked potential of >300 mill boe, we have previously estimated the value potential if the well is successful to be SEK 2.5-3.0/share net to Africa Energy and NOK 15/share net to Panoro (Brent USD 70/bbl long-term). Africa Energy is carried for the well through the farm-in agreement completed in April 2020. We have BUY recommendations on Africa Energy (TP SEK 4.50) and Panoro (TP NOK 33).
Africa Energy – Increased news flow to trigger share price appreciation & Shift in energy sentiment more beneficial than most think Africa Energy’s share price has lagged vastly behind the sector in 2022 (up 7% vs 34% for our covered E&Ps). This is likely explained by no exposure to producing assets directly benefiting from the appreciation in spot prices and lack of news flow. With a rig now secured for exploration drilling later this year, submission of application for Production Right at Block 11B/12B by September and potential news on gas offtake, the latter should change going forward. In addition, we think Africa Energy benefits more from higher commodity prices than most think as it makes the Block 11B/12B development more attractive and provide potential future buyers of the company with ample financing capabilities. BUY/TP SEK 4.50
Summary :
We are very bullish AEC. It is our largest position in oil now. There are multiple catalysts in the very near future:
2B drilling news-flow should push AEC higher – see the research above
Off-take agreement on 11B/12B should be announced any time now
After Off-take agreement Total will file an application for production rights.
After these two are achieved AEC will be in position to sell 11B/12B stake. This could therefore happen already this year
In my previous posts I provided more details including my valuation of Africa Energy stake in 11b/12B.
We are long AEC. We have been buying the parent company Africa Oil (AOI), as the stock sold off in the last three days, as investors expected a higher dividends.
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.
I wrote about investment ideas how to protect portfolio in the war time last week. The ideas are up 20-40% in a week.
Today is another ideafrom this bucket. CoolCo (COOL), an LNGC tanker spin off from Golar LNG had an IPO two weeks ago. The company is still in blackout (brokers involved in the IPO are not allowed to publish a research for 30 days from the IPO launch), no research therefore available. CoolCo is off radar screens of most investors. That should change within two weeks as blackout end.
There are two plays with this asset. First is the blakcout play. There were several banks in the IPO Syndicate. When they are out of blackout the stock gets investors attention, as brokers will publish their research.
Second is the Russian sanction play. If Russia limits the gas supplies to Europe, LNG carriers would be an ideal hedge. Europe will try to source the gas from Quatar and other places. CoolCo would be one of the beneficiaries. I think the supply diversification will happen in any case. Europe will want to reduce its Russia dependence. It is silly that we are funding Russia to make a war against us.
Mishandled IPO – the IPO was placed at 88NOK. The market conditions worsened during the subscription period, the company panicked and closed the deal early. That resulted in many investors getting too high allocations. Some got too much and sold the shares when trading opened. That pushed the share down to mid 70s NOK. The share price re-rated back to around 80 NOK, still 10% below IPO price two weeks ago.
In summary the stock is cheap by mishandled IPO. The re-rating should come organically with the end of blackout period when brokers will publish their research. The could be a material uplift if Russia would limit gas supplies. Even if there is no gas interuption from Russia, EU will try to reduce dependence on Russia gas. That all should benefit CoolCo.
Other news
Quantafuel yesterday reported that Thorleif Enger, Member of the Board of Directors in Quantafuel ASA,has bought 30,000 shares in Quantafuel ASA through Thoeng AS at a price of NOK 17.88 per share. After the transaction, Thorleif Enger and affiliates hold 189,300 shares. We are reporting we have increased our position by similar amount. We believe QFUEL is close to commercialization. We are very bullish on this opportunity. The risk reward is very attractive.
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.
The Q4 major news was restarting on Skive today. QFUEL showed an online tour of the plant and showed one line already heating up. Second line should be in operation by mid March too the management reconfirmed. CAPEX increased by 10 mln only. Do watch the Q4 replay from Quantafuel web, it should be there shortly after the call end.Very impressive.
The recent share price drop on the plant recent down time was around 10 NOK or 40%. The market took this as a major event. The CEO said before, that such issues happen even for operating plants. “there are gas leaks on monthly basis for similar plants”. It is comforting how quickly the process identified the issue and how quickly the plant was repaired.
Brokers summaries on the Q4
Pareto Securities
QFUEL NO – Quantafuel – Skive production to resume within days & 2022 guidance reiterated
Quantafuel reports Q4 EBITDA of NOK -61m, which is in line with our expectations. Most importantly, the company state that the first reactor chamber is repaired with heating ongoing and plastic feeding expected to commence within days at Skive. Thereafter, production from the second line is expected to commence by mid-March. This is slightly ahead of previous guidance and our expectations.
Quantafuel also reiterates the 2022 production guidance of 12,000 MT of plastic waste to be recycled, which in our view is positive compared to market expectations. The company is therefore back on track towards achieving “proof-of-concept” and a successful production ramp-up that are key to prove up the value of the technology. With NOK 284m of cash at YE’21 and NOK 400m of additional equity secured in Jan’22, Quantafuel is in a good position to finance further growth. At Esbjerg, close on financial partner is likely the next step.
Fearnley Research:
QFUEL announce 4q21 results this morning posting revenues of NOK 2.3m (CS NOK 4m), EBITDA coming in at NOK -61m (CS NOK -26m), and net income NOK -74m (CS NOK -32m). Revenues mainly stem from operations in Kristiansund (NOK 1.5m) and NOK 0.7m in grants through Avfall Norge. The higher costs compared to CS numbers are mainly driven by higher SG&A and COGS due to increased operations. Cash positions amounted to NOK 285m at the end of 4q21, with additional NOK 400m raised through a private placement end of January.
Skive production target of 12,000 MT for full year 2022 is maintained, where the company expect the two lines operating though January to be back in production by mid-March. This is in line with previous announcement made post the mechanical failures in February. As a result of these repairments, estimated Skive CAPEX is increased by NOK 10m to a total of NOK 620m.
Further announcements include continued progress at the Kristiansund facility towards an integrated sorting, mechanical and chemical recycling plant (completed expansion to 20,000 MT capacity sorting line), construction of the Esbjerg sorting facility is expected to begin during 1h22 with first production in 2h23. Target start date of the planned chemical recycling facilities with VTTI is significantly delayed due to complications regarding the permitting process.
ABG
Quantafuel sticks to ’22 production guidance Quantafuel released its Q4 report this morning. It now guides for both lines to be back mid-March (vs previously minimum 1 line).
The first line has been repaired and expected operational within the next few days. It is keeping the FY ’22 production guidance of 12.000t (which is hence unchanged vs before the Q1’22 shutdown). Q4 EBITDA was -61m (ABGSCe -40m), but its YE cash position was NOK 284m (vs ABGSCe NOK 264m), i.e this is prior to the NOK 400m equity issue.
The financial guidance appears unchanged, except that Skive total capex (now completed) ended at NOK 620m (vs. guidance 610m). The company continues to work on the roll-out plan, but states that permitting issues is pushing start-up on the Amsterdam plant with Vitol to ’25-26 (ABGSCe ’24). The Dubai plans could offset this slippage vs our estimates, depending on the scale (guided start-up ’23-24). We expect the market to focus on the positive update on Skive, and hence consider this a positive report albeit hampered by the slippage on the roll-out in Amsterdam.
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.
Fit Investment Ideas 