Betolar Extensive Report: The stakes are in new technology

Translation: Original published in Finnish on 10/06/2025 at 07:00 am EEST

The progress of the investment story of Betolar, which focuses on replacing cement and utilizing industrial side streams, has clearly fallen short of expectations during its stock market journey so far. The core of the story is proving Betolar's new method on an industrial scale, where success is critical, also considering the financing needs looming in the near future. Despite the high potential, risks related to the start-up of the business and the availability of financing turn the risk/reward ratio weak. Therefore, we reiterate our Reduce recommendation but revise our target price to EUR 1.3.

Aiming for value creation with circular economy principles

Betolar is an early-stage material technology company that aims to find valuable uses for industrial waste streams and reduce emissions by replacing traditional cement with alternative materials. Betolar was founded in 2016 to solve the emission problem of cement use with its geopolymer technology, which enables the utilization of industrial side streams as a binder in concrete instead of cement. In recent years, the company has focused its limited resources on advancing commercialization in the mining industry, as this customer segment both produces large waste streams and consumes significant amounts of cement. The commercialization of the solution has been slower and more difficult than the company expected, reflecting which, financial targets have been cut and postponed several times. The investment case currently centers on a new method that enhances the utilization of metal industry side streams. Betolar states that this method enables them to recover valuable metals that previously ended up as waste and use the remaining material to replace cement. The method's value proposition and a large market create high value creation potential, but Betolar still faces a challenge that has proven difficult: proving the solution's viability in industrial and commercial use.

Commercialization of the new method requires additional funding

We estimate that the first significant revenues from the new method will at the earliest be generated in 2027, as the design and manufacturing of the industrial equipment required by the method, along with its integration into the customer's production processes, will make the start of production slow. Thus, our estimates for the coming years rely on the commercial phase progressing in the mining segment, where Betolar already has commercial products. Towards the end of the decade, we expect the new method to move into the commercial phase, which will bring a new revenue growth spurt. In addition to operational risks, Betolar carries a financing risk, as our estimates assume the company will find additional financing of around 10 MEUR in 2026-2028. Concrete advances in commercialization during the current year would also be very important from the perspective of securing financing, as the terms and availability of financing are highly dependent on commercial progress. We believe Betolar's main owner is committed to the development of the company, so the risk related to the continuity of the company is limited despite the tightening balance sheet situation.

A high risk level warrants caution regarding the stock

Due to Betolar's early development phase, the predictability of the business is very low and the risks associated with estimates are high. Based on our estimates expecting fast growth, Betolar's EV/S multiples (22x-7x) are higher than for the peers as a whole.  Our DCF model, which focuses on long-term potential, reaches EUR 1.3. However, options and financing needs put upward pressure on the number of shares in the model, which we believe limits the expected return. Stretched valuation combined with high business, financial, and estimate risks keeps the risk/reward ratio subdued in our books.