Metacon Q4 on Thursday: Outlook on current and future projects in focus

Metacon will publish its Q4 financial report on Thursday morning. We expect revenue growth to continue and relative profitability to improve slightly year-on-year. Due to the early stage of the company, we do not expect Metacon to provide guidance for 2024. However, any comments on the progress of current and future orders and partnerships are of high interest to investors. This is particularly the case for the prospective projects in Romania and Poland, as our estimates assume that they will start in 2024.

We expect revenue growth to continue

We estimate that Metacon’s revenues will grow by 105% in Q4 to 22.5 MSEK. We expect growth to be driven primarily by the ongoing electrolyzer orders in Sweden and Slovakia. Our revenue estimate is in line with Q3’23 (20.1 MSEK), which also consisted of revenues from the same projects. As revenues are tied to specific projects, we note that revenues may fluctuate from quarter to quarter and may differ decidedly from our estimates. We expect Metacon’s Q4 adjusted operating profit to remain negative (-19.0 MSEK) due to the still low absolute level of revenue. As the company only had a small amount of debt at the start of the fourth quarter, our net income estimate is roughly in line with the operating profit. With a rights issue completed in early 2024, the company’s financial position at the end of 2023 offers limited insight. However, cash flow development during the quarter is of great interest as it will help us assess the future level of cash burn.

Growth to continue through 2024, with focus on current and future projects

Looking ahead to the new year, we expect revenue growth to accelerate and the operating margin to continue to improve. Our sales estimate for 2024 is 148 MSEK and adjusted operating profit -80 MSEK. We expect the main growth drivers in 2024 to be the three previously announced electrolyzer projects: Slovakia (45 MSEK), Romania (184 MSEK) and Poland (60 MSEK). It should be noted that the Romanian and Polish projects have not yet progressed to order status and are a Master Supply Agreement and a Memorandum of Understanding, respectively. In addition, both prospective projects are delayed from their original schedule. The Romanian project is dependent on the receipt of an EU grant. The EU grant application has since been rejected, but a new application has been submitted under the same conditions. As the first application was rejected, the risk of the Romanian project not being realized has increased. As for the Polish project, Metacon believes that it can be expected to commence in 2024. As a result, any comments regarding the progress of these projects, as well as any other new orders or partnerships, could provide investors with material information that could influence near-term estimates and impact the share price. Metacon successfully raised approximately 100 MSEK in a rights issue in early 2024, improving its financial position. However, with the increased investments expected from Metacon in starting the construction of its Gigafactory, additional funding might need to be secured. Metacon will evaluate the possibility of obtaining financing through national and EU support programs and other forms of financing for the new factory.