Is this now a bit like a wild gamble? How can one figure it out? It sounds too good to be true.
The product is like something straight out of an infomercial. âBut wait, thereâs more!â If Iâve understood correctly, the entire production of the planned Factory 02 has already been reserved through letters of intent (LOI) or similar agreements.
1 Like
What about this sounds too good to be true? The company is going to burn tens of millions on salaries and R&D over the next 4 years and invest approximately -200m in an industrial-scale factory (if they manage to raise the funds?).
The facility will produce (if it works) 13kt of protein. Comparing it to pea/soy/faba protein, the peer price per kilo is around 5� At best, the company generates 60m in revenue? Even at that scale, Inderes forecasts negative EBIT. Even if the factory reached 30% EBIT margins with 60m revenue, the payback period for the factory would be 10 years. How can this factory investment be justified to new investors? Current investors will also be significantly diluted in the future.
Solar Foodsâ market cap is 150m, so with my own forecast of 60m revenue for FY30 and an optimistic 20% EBIT, the 2030 multiples would be 2.5x 2030 sales and 12.5x 2030 EBIT. In the meantime, current owners will be diluted and there will be +50m of debt on the balance sheet.
GLGL (disclosure, not long or short)
7 Likes
It is crystal clear that there will be dilutions along the way. Operations will remain loss-making for a long time. If you are not prepared to stomach these, you should stay far away from Solar Foods.
For me personally, the participation of Fazer, GEA, and pension funds in the latest directed share issue (âŹ4.85 per share) are signals that those following the company closely, as well as some âbig moneyâ players, see potential in the company and want to be part of this.
3 Likes
On top of this is the fact that no health authority in any significant market has yet approved the product, so the project might stall for that reason alone. EFSA has requested additional information several times, and they are currently waiting for further clarifications regarding the productâs nutritional content and toxicity (https://open.efsa.europa.eu/questions/EFSA-Q-2022-00140). This should be the primary focus for investors right now. If approval is granted, then one can turn their attention to financing issues and production facilities.
2 Likes
The word âtoxicityâ sounds a bit off to me, given thatâat least on paperâsolein is an excellent protein for human consumption (amino acids, cholesterol-free, contains none of the most common food allergens + much more). I will bypass the iron content topic here, as it has been discussed extensively before.
But regarding the novel food authorization risk, that is spot on! If authorizations are significantly delayed or if there are even rejections, the rug will be pulled out from under the entire company.
As for the EFSA authorization, my own expectation is optimistic. Solar Foods has stated that the company expects to receive said authorization during this year. In an Inderes interview conducted after the Capital Markets Day, CEO Jokela stated something to the effect that these expectations are justified because Solar Foods maintains contact with the EU, and the messaging from there supports these expectations. So, we are not relying purely on blind faith, and the CEO has put his own credibility on the line here.
If, on the other hand, the EFSA authorization is not obtained within this year according to the companyâs and my own expectations, I would have to reconsider the future of my investment in Solar Foods.
It is completely understandable if an investor wants to follow this story from the sidelines (for now?).
1 Like
Did you look at the link I shared? I didnât make up the toxicity part; EFSA wants to see documentation regarding, among other things, toxicity.
1 Like
Of course they want it and of course it has to be researched, since it is a novel food. Itâs a completely standard thing.
1 Like
True, it requires documentation regarding toxicity, among other things, and that is of course how it should be. My post was partially unsuccessful; for instance, it gives the impression that your text contains parts that are accurate and parts that âdonât ring true.â My apologies.
1 Like
Here are Thomasâs comments on Solar Foodsâ partnership with Fortum 
3 Likes
Here are Thomasâs comments as the Solein consumer product enters the U.S. market
Solar Foods announced on Tuesday that the first consumer product containing the Solein protein developed by the company has been launched in the United States. The launch is taking place in collaboration with the sports nutrition company Ambrosia Collective. We view the news as a positive step in the commercialization of Solein, as it demonstrates the productâs suitability for the mainstream supplement market and serves as an important reference in the U.S. market.
3 Likes
This news is already a few days old, but Iâll add it here to the thread.
5 Likes
3 Likes
The headline of the release is very misleading. The company has not received FINANCING, but has received a COMMITMENT for financing, provided that the conditions are met.
1 Like
Well, there isnât anything particularly strange about that. That is how public subsidies work. Naturally, the grantor of the subsidy needs to see evidence that the project is actually progressing before any euros are transferred.
3 Likes
True, there isnât, but the headline of the press release (especially the English version) and the articles imply that the funding has been âreceived.â That is not the case.
edit. I donât understand why, when I try to ensure through my writing that no investor gets the wrong impression from misleading communication, I am attacked. I am on the side of the investors here. The companyâs situation does not become more positive by concealing, hiding, or distorting things. Nor does an investorâs investment become more profitable by leaving the companyâs actions completely uncriticized and blindly believing everything investors are told. Being critical also doesnât weaken the companyâs chances of success; in fact, it improves the investorâs chances of success.
2 Likes
Looks very promising. Itâs a big deal if this conditional support and low-interest loan come to fruition.
1 Like
The loan terms are certainly very sweet. A long grace period, no collateral, and a 1% interest rate.
3 Likes
The company announces it has received support for building the factory. How strongly do you think they should disclaim right in the headline that the support is conditional on the factory actually being built? 
Edit. Especially since they still clearly state it in the release itself.
5 Likes
Here are Thomasâs comments regarding the funding Solar Foods received for the Factory 02 plant investment.
Solar Foods announced on Wednesday that Business Finland has granted the company a total of EUR 77.8 million in funding for the construction and commissioning of the Factory 02 production facility. In our forecasts, we had assumed the company would draw the maximum IPCEI support of EUR 110 million, so the grant decision of just under EUR 40 million was in line with our expectations. However, relative to our expectations, the news included a EUR 38.1 million R&D loan granted to the company on attractive terms. The secured financing is positive for Solar Foods and represents another key step toward the industrial-scale Factory 02 plant. At this stage, the announcement does not necessitate changes to our forecasts. However, it is a demonstration of Solar Foodsâ ability to raise financing on terms more favorable than market rates; furthermore, the low-cost loan financing reduces the equity dilution risk associated with the Factory 02 investment.
6 Likes