Overall, Metacon’s Q1 report was better than expected, and the company has continued to grow its order intake since the end of the quarter, supporting our estimates for sustained growth. That said, we acknowledge the significant risks and uncertainties regarding the company’s ability to consistently secure large orders and maintain sufficient working capital to fulfill them. While liquidity is expected to remain tight until June/July 2025, when we anticipate the release of a significant portion of restricted cash tied to previously announced orders, we believe Metacon is well-positioned to secure short-term project financing on reasonable terms, if needed. With improved near-term revenue visibility, where our 2025 revenue estimates are largely “secured” by the existing order book, we believe the current valuation offers an attractive risk/reward profile. As a result, we reiterate our Accumulate recommendation with an increased target price of SEK 0.23 (was SEK 0.16), mainly due to an upward revision of our estimates.

Q1 report beat our expectations

Metacon’s Q1 revenue reached 50.1 MSEK, representing a significant increase compared to the previous year, albeit from a low base due to limited project activity during the same period in 2024. The revenue exceeded our expectations, primarily due to a higher-than-anticipated completion rate in the Motor Oil project. While Q1 revenue came in above our expectations, the gross margin was below forecast (21% vs. 27%). However, operating expenses were lower than expected due to effective cost control, resulting in EBITDA roughly in line with our estimates.

While cash flow remained deep in the red, it was slightly better than our expectations. At the end of Q1, the company’s cash position amounted to 79.2 MSEK, however, 45.3 MSEK of this remains restricted as collateral for bank guarantees. As we have previously noted, we expect liquidity to remain tight until June/July 2025, when a significant portion of the restricted cash tied to previously announced orders is likely to be released. However, due to lower-than-expected cash burn in Q1, we are now less concerned about the short-term liquidity situation, and we believe the company should be able to bridge the gap until the release of restricted funds.

We revised our estimates due to increased order intake

Although revenue exceeded our expectations, this was primarily driven by higher-than-anticipated recognition of the Motor Oil order. Consequently, we have left our revenue estimates for the project unchanged and now expect slightly lower contributions from it in the coming quarters. However, a newly secured ~20 MSEK order for a wind-to-hydrogen pilot plant has led us to raise our 2025 revenue forecast by around 5%, with a modest increase for 2026. Our 2025 profitability estimates have also improved, supported by higher expected revenue and slightly lower cost assumptions following Q1. The impact on 2026-2027 is, however, limited in absolute terms.

Risk/reward still attractive at current valuation

Our estimated value per share ranges from SEK 0.12-0.47 (was 0.08 to SEK 0.34), which is slightly higher than our previous range mainly due to our increased estimates. The range is also supported by our DCF. In our view, with the recent large-scale orders in hand, Metacon is better positioned to achieve broader commercialization. However, uncertainty remains regarding the company's ability to secure additional large orders on a consistent and profitable basis. Given these factors, we increase our target price to SEK 0.23 (was SEK 0.16) which is still at the lower end of our estimated per-share value range. This is based on the assumption that deliveries to Motor Oil proceed as planned and that order intake will continue to grow in the coming years. As the expected return slightly exceeds our required return, we reiterate our Accumulate recommendation.