Metacon Ab (METAC) - PURE ENERGY

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Alright… Inderes has just started following a company called Metacon. I thought I’d start a thread for this, even though I knew almost nothing about the company before today. The field is also completely new to me, so don’t be surprised by my ramblings. My sources were Inderes’ materials, Google, and the company’s website. :slight_smile:

Company in brief:

Metacon is an energy technology company that develops and sells small and large energy solutions for hydrogen production, electricity, and heat. The company was founded in 2011 and holds patented technologies for hydrogen production from biogas or other hydrocarbon derivatives. Its product range includes, for example, gas refueling stations and larger CHP systems. The company’s headquarters are located in Örebro.

History

The company was founded in 2011 to invest in and market hydrogen-related products. The first acquisition was made in 2013 when Helbio was acquired, whose patents and expertise were utilized in the commercialization of catalytic reformers. By 2016, the company had delivered a few devices.

The company was listed in 2018 and began building a factory in Greece. Soon after, the company delivered its first reformers as well as a few CHP and APU systems.

A significant step was taken in 2021 when the company acquired Water2H2 to enter the electrolysis market. This then initiated a project to convert biogas into hydrogen using Metacon’s reformer. Metacon entered into a licensing agreement with PERIC to manufacture its own electrolyzers.

This is apparently the company’s core business:

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After watching the company’s mission and vision

The company’s board and other management can be found behind this link:
https://metacon.se/leadership/

The company’s CEO Christer Wikner was already interviewed by @Anton_Damsten three months ago. :slight_smile:

Metacon is an energy technology company that develops and sells small and large energy systems for the production of hydrogen, electricity, and heat. The company was founded in 2011 and holds patented technology for the production of hydrogen from biogas or other hydrocarbons. Listen to CEO Christer Wikner as he is interviewed on Equity stories with Inderes.

Contents: 00:00 Start 00:19 Introduction to Metacon 02:01 Key Products 05:30 Competitive Advantages 10:43 Metacon’s Strategy 15:10 Creating Shareholder Value Going Forward

Metacon AB and Uppvidinge Vätgas organized the opening of a public hydrogen refueling station. The aim was to demonstrate that it is possible to transition Sweden’s fuel supply from imported fossil fuels to locally produced green hydrogen.

I see a certain brotherhood in this company, which I feel nostalgic about with my hydrogen brothers:

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And then the best part, here’s a fresh COMPREHENSIVE REPORT by Anton, which is available for everyone to read, meaning there are no paywalls. :slight_smile:

Green hydrogen equipment provider Metacon has grown its revenues significantly by securing several electrolyzer orders. With the strong demand outlook for green hydrogen, we see potential for continued robust revenue growth. Due to still negative cash flow, Metacon has depended on share issues to finance its operations. Large orders could quickly take the company to cash flow positivity, but visibility into future orders and profitability improvements is currently low, and further equity issues are possible. Hence, we currently see the stock’s short-term drivers and risk-to-reward ratio as insufficient.

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Metacon julkaisee Q4-raporttinsa torstaina. Tässä on Antonin etkokommentit siihen liittyen. :slight_smile:

Metacon will publish its Q4 financial report on Thursday morning. We expect revenue growth to continue and relative profitability to improve slightly year-on-year. Due to the early stage of the company, we do not expect Metacon to provide guidance for 2024. However, any comments on the progress of current and future orders and partnerships are of high interest to investors. This is particularly the case for the prospective projects in Romania and Poland, as our estimates assume that they will start in 2024.

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Our friend @Anton_Damsten has shared his comments on Metacon’s morning result. :slight_smile:

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@Anton_Damsten on tehnyt uuden yhtiörapsan Metaconista. :slight_smile:

Metacon’s Q4 revenues came in markedly lower than expected. According to Metacon, the decrease in revenue was primarily due to changes in the company’s sales focus that were implemented during the period. We had hoped to receive an update regarding previously announced projects to gain better visibility into the timing and likelihood of these projects materializing, as these projects underpin our near-term estimates. However, no such update was provided and the continued low visibility into these projects and future projects creates further downward pressure on our estimates. Hence, we continue to see the stock’s short-term drivers and risk/reward ratio as insufficient.

https://www.inderes.fi/research/q4-revenues-disappoint-amid-shift-towards-larger-projects

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Lucas Mattsson on tehnyt uuden yhtiöraportin Metaconista. :slight_smile: :gem:

Metacon’s Q1 report fell short of expectations on a relative basis, although the deviation in absolute terms was marginal. Reflecting the challenging market, information on order flow and existing project deliveries remained limited. Nevertheless, Metacon’s recent collaboration with Siemens for the supply chain and capabilities of the European Gigafactory bodes well for the project’s credibility. Consequently, we see a reduction in the risks associated with the project and its financing, and slightly increase our target price. However, considering the parameters of the project remain unknown and challenging demand environment will put pressure on revenue and order flow in the short term, we wait for a more attractive risk/reward profile.

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Summarize for me, energy experts: Hydrogen production from methane is an existing technology that is widely in use - what is Metacon’s “edge” in their own technology?

The company has started a collaboration with Siemens - good - because otherwise, I’d say that scaling up big might be difficult or take another 10 years and 5 rights issues.

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Tässä olisi Metaconista etkokommentit Lucaksen tapaan. :slight_smile:

Metacon will release its Q2 results on Thursday. We expect revenue to decline mainly due to lower deliveries and tough comparable figures in Q2’23. Profitability is expected to remain negative as a result of still low absolute level of revenue. Metacon recently announced an order for the supply of a large-scale industrial electrolysis plant valued at ~226 MSEK, which we commented on here. In the upcoming Q2 report, we are looking for any comments regarding the delivery schedule for the order, as well as information regarding the progress of the three ongoing larger electrolyzer projects in Slovakia, Romania and Poland.

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Metacon’s financing need decreases significantly thanks to a rights issue (up to 138 MSEK) and 50 MSEK in bridge loan financing, which secures the company’s financing until the second or third quarter of 2025.

The rights issue is directed to existing shareholders, and if the issue is fully subscribed, the number of shares will nearly double. The success of the issue is supported by significant underwriting arrangements. The proceeds will be used for loan repayment, international expansion, and improving production capacity, including the construction of an electrolysis plant.

Here are @lucas.mattsson’s comments. :slight_smile:

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Metacon’s rights issue was preliminarily subscribed to 25.3%, and the guarantors’ share raises it to 80% (110 MSEK before costs). The valuation remains unchanged as the cash flow target is met.

Here are Lucas’s comments on the matter. :slight_smile:

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Metacon’s recommendation remains “reduce”, and the target price has been lowered to SEK 0.12 due to a weakened outlook. The company’s growth potential depends on the commercialization of hydrogen technology, but the market situation, financing risks, and scarcity of orders increase uncertainty; additionally, further funding is needed to fulfill large orders. Also, the weakening outlook and the slowness of the hydrogen sector push valuations into the lower “price range”.

“Given the ongoing weak market conditions and the lack of new orders, we believe that operational risks have increased. In addition, the falling share price has increased financing risks and is starting to cause uncomfortably high volatility in expected returns and dilution.”

Below is @lucas.mattsson’s recent analysis of Metacon. :slight_smile:

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Metacon has increased its ownership in Norwegian Pherousa to 35 percent and signed an updated license agreement for ammonia conversion technology. The project supports sustainable shipping, but its commercial impact is still uncertain.

Metacon has announced that it has acquired additional shares in Pherousa, a Norwegian technology transfer company within the maritime industry, bringing its total ownership to 35% of the capital. With this increased shareholding, along with an updated exclusive license agreement, we believe that Metacon is gaining a larger stake in an innovative company in an exciting market at a seemingly low cost. However, this news does not directly impact our forecasts or our view on the stock.

Here are @lucas.mattsson’s comments on the matter. :slight_smile:

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Tässä on herra Mattssonin ennakkokommentit, kun Metacon julkistaa Q4-tuloksensa keskiviikkona. :slight_smile:

We anticipate a significant increase in revenue, primarily driven by the expected recognition of revenue from the large-scale order from Motor Oil. However, given the variable nature of raw material and consumable costs, which are expected to scale up with revenue, we believe EBIT will remain negative. In the upcoming report, we look for management’s comments on the demand situation and further insights into the company’s financial position.

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Lucas wrote about how Metacon signed an additional agreement with PERIC. :slight_smile:

Metacon announced that it has signed a supplementary agreement with PERIC, which grants Metacon the rights to manufacture central modules for electrolysis systems. In our view, if manufacturing and sales prove successful, this could help create a more stable and long-term revenue stream in addition to the one-off sales of new electrolysis systems. Although the supplementary agreement supports the basis of our forecasts, it does not require immediate changes.

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This is indeed an extremely interesting company. Its market capitalization is at rock bottom compared to other hydrogen hype stocks. Clearly, cash sufficiency is a concern, and absolutely massive dilution has discouraged investors. However, the company has received large orders recently, and activity is happening in several business areas. In 2025, payments for old orders will come in, and advance payments will be released. Additionally, the warrant issue is underwritten, and there seems to be cash left from previous ones.

Now that interest rates have fallen, hydrogen investments have started pouring in from all directions. I’d say, based on a hunch, that cash risk is present, but this is the cheapest valued hydrogen company relative to its potential.

The current warrant issue is again underwritten with a 10% premium. Isn’t that a quite reasonable underwriting fee? More expensive ones have been seen. Apparently, some investor believes in this a lot.

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Here’s a news item not previously brought up on the forum:
Metacon’s and Pherousa’s ammonia cracking technology has received preliminary approvals (AiP) from the American Bureau of Shipping (ABS) and DNV. This technology enables the conversion of ammonia into hydrogen, which can be used as fuel for ships, leading to fully electric and emission-free propulsion. The project involves partners such as Finnish Deltamarin and Babcock International (market cap 4 billion). The goal is to develop propulsion for 64,000 DWT bulk carriers. This roughly corresponds to a medium-sized Panamax class, i.e., a cargo ship that transits the Panama Canal.

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Press Releases - Metacon

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Contract negotiations are underway for a relatively small 20M SEK order. However, this is a pilot for a larger project.

Trading of To1 warrants ends today and subscription by Friday. At least a moment ago, shares could still be acquired at a good discount through the warrants.

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So, this is about using wind power for electrolysis. The order value is 2 million euros. Previously, a 30MW electrolyzer order was valued at 20M EUR. From this, one could roughly estimate that the pilot project will likely be implemented for the production of one medium-sized wind turbine. An electrolyzer order corresponding to the production of an entire wind farm could therefore be 10-20 times larger for a typical small or medium-sized wind farm. Of course, these farms range from 3 to 100 turbines.

Surely nothing prevents electricity from being produced directly from the grid when the price is favorable: If electrolysis happens directly at the plant, then perhaps one avoids paying electricity grid fees?

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Here are @lucas.mattsson’s comments on how Metacon strengthens its cash position through the use of warrants. :slight_smile:

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91% subscription without underwriting commitments is an excellent result.

I missed the subscription myself, mainly due to my own stupidity. I expected to be able to place the subscriptions on Friday, as mentioned in the prospectus.

I started wondering why there was nothing in the corporate events, and no message about a corporate event had come now or earlier.

It turned out that Nordnet had internally closed the subscription period 2 days earlier. To put it mildly, it’s extremely annoying that they haven’t bothered to display that information in connection with trading.

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Updating on the latest news regarding Metacon. And good news:

  • bridge financing is in order;
  • a new small, but promising-sounding pilot in a new market area;
  • better than expected Q1 with record revenue, which led Inderes to raise its target price from 0.16 to 0.23 kronor.

Of course, there is risk involved, but the current valuation is not exorbitant, and recent signs have been clearly positive.

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