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 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.
We have received some investor questions regarding our net liquidity calculation for Metacon's recent rights issue, as presented in our latest research update. This note clarifies those details.
As noted in our recent research report, 41 MSEK is our estimate of the net new funding coming in at the conclusion of the rights issue after the company repaid its bridge loan and related costs. To clarify, this comes on top of the 50 MSEK bridge loan taken earlier at the beginning of the rights issue. In total, we estimate the company to have secured 91 MSEK new funding in Q4’24.
As detailed in our report, we estimate that the current funding will last until around summer 2025, based on a quarterly burn rate of 25–30 MSEK. We also anticipate that approximately 180–190 MSEK from the Motor Oil order will be released around the same time. This means that the liquidity situation is tight and that the burn rate over the coming quarters and the timing of when liquidity from the project is released will significantly influence whether the company will need to secure additional financing before generating positive cash flows from the Motor Oil order. Regardless of the timing, based on our current estimates outlined in the recent research report, we believe that Metacon will require additional financing during the next 2–3 years before reaching cash flow neutrality, unless new customer projects require less working capital during the initial phase. We are particularly interested in more details regarding the timing of cash flows from the Motor Oil order, the current burn rate, and Metacon’s financial position in its Q4’24 report, which will be released on February 26.
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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, and we wait for these risks to subside.
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.
