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.

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.

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.

Metacon will announce its Q1 results on Thursday. We expect good revenue growth and relative profitability to improve slightly compared to the corresponding quarter last year. In our view, Metacon’s investment case and valuation relies on improving visibility on revenue growth, and clear signs of both increasing order intake and order book conversion to revenue would be important drivers of improving this visibility. Thus, we are keeping an eye on any information regarding progress of current and future projects.