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 has patented technology for the production of hydrogen gas from biogas or other hydrocarbons. The range consists, for example, of gas stations and larger CHP systems. The company has its headquarters in Örebro.
Metacon has announced the preliminary outcome of their rights issue, which indicates that subscriptions by exercise of subscription rights amount to 24.6%. Additionally, applications for subscription of 4,672,411 shares without the support of subscription rights, corresponding to approximately 0.7% of the rights issue, have been received. Thus, the preliminary outcome indicates that the rights issue is subscribed to approximately 25.3%, and an additional ~54.7% will be subscribed for by guarantors. In total, the rights issue is therefore expected to reach 80% of the maximum subscription, or ~110 MSEK before expenses. While we had anticipated the rights issue to be fully subscribed, the fact that the stock price has occasionally traded below the subscription price makes this outcome less surprising.
Metacon’s Q3 results were mixed, with revenue aligning with our expectations while costs were significantly higher, reflecting the company’s preparations for larger-scale deliveries. With short-term funding soon in check, Metacon can focus on fulfilling the large-scale order from Motor Oil, with clear signs of progress expected to be visible next year. However, given the uncertainty of whether the company will continue to receive larger orders regularly and at what profitability level, the forecast risks remain high.
The recently announced capital raise reduces the financing risks and secures the company’s financing until late 2025. Due to the overall structure of the raise, we expect it to succeed. With short-term funding soon secured, Metacon can again focus on executing its commercialization plans.
The raise, consisting of a rights issue (up to 138 MSEK) and a bridge loan (50 MSEK), lowers the short-term financing risks we had flagged, securing financing needs until around Q2/Q3 2025, when there may already be more signs of accelerating revenue growth. The parameters of the rights issue were somewhat different than expected, including higher dilution, which puts downwards pressure on our valuation of the stock. We expect to address this in more detail in the near future with an update on our view on the company’s valuation. However, the lower valuation of the raise together with the large share of guaranteed commitments should help make the raise successful, which would give the company runway to show more signs of commercial success.
Metacon’s Q2 report was below our expectations, and we expect deliveries of larger orders to be deferred to next year. However, with the recent breakthrough order in hand, we believe that Metacon is better positioned to achieve broader commercialization. This, coupled with establishing strong partnerships with credible partners like PERIC and Siemens should support the company in future funding negotiations.
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.
On Thursday, August 8, Metacon announced that it has received an order for the supply of a 30 MW industrial electrolysis plant valued at 19.8 MEUR (~226 MSEK). We believe that this order reflects Metacon's competitive offering in large-scale electrolyzers and successful verification of the technology, as well as the start of the Company's previously announced European manufacturing footprint. Due to the significant size of this order, which on its own is in line with our full-year estimates for 2025, we will revise our estimates and review our recommendation and valuation no later than in connection with the upcoming Q2'24 report on August 22.
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.