- 85 NOK und die Kapitalerhöhung plus Subsequent Offering schon berücksichtigt -
Pryme, Quantafuel plastic recycling peer got very positive report by Nordea analyst Elliott Jones. The share price is beaten down since the IPO. Lately market was concerned about the capital raise in the current markets. The capital raise happened, which is a major short term catalyst. The share price saw +30% based on Elliott Jones report. As the major risk is resolved we are bullish. This could be a Pryme ride this year.
If you look at Quantafuel graph, the share price performed very well up to starting the production. Nordea indicates this could happen with Pryme too.
Quatnafuel – we speak to large investors that spoke to the company recently. All the feedback are very positive. Hope for a company update soon.
We are scheduled to talk to Arctic analyst on Quantafuel this week. Stay tuned for a report.
Extracts from Nordea Research:
First facility is fully capitalised
What has happened? Capital raise finally complete
In the company’s Q4 report in February, Pryme announced that it aimed to raise EUR ~15m to ensure completion of its first facility in Rotterdam
On 8 April (last Friday) the raise was finally complete, with Pryme raising NOK 154m via a private placement
In line with previous comments, the proceeds will fund remaining capex for its first facility, opex until mid-2023, the acquisition of an industrial plot in the Port of Amsterdam and working capital movements
Changes to estimates
We include the capital raise terms and expected upcoming repair issue in our model, which results in Pryme’s first facility being fully capitalised (production expected Q4 of this year)
The proceeds from the raise result in a slightly smaller future capital requirement than previously expected, with the company’s second facility due in H1 2023 (we build in the raise just prior to construction beginning)
We hold all other estimates unchanged
Valuation
Our valuation methodology unchanged, which involves deriving cashflows for each future facility and discounting back to today (WACC, propability weightings etc all constant)
However, by updating our estimates for the above and updating for FX, we arrive at a new target price of NOK 85 (100), primarily due to the dilutive aspect of the capital raise
What do we think?
Despite the above, we see clear advantages from the completion of the placement:
The share price is down by over 35% since the February announcement, pointing to the possibility of a recovery once the dust settles
Given a new CEO will start in May and the first oil is expected in six months (key triggers), we foresee no negative changes to business fundamentals
Even post the raise, Pryme remains clearly the cheapest option on the market for chemical recyclers today (including 8x lower than QFUEL)
Thus we reiterate Buy, with Pryme representing by far the cheapest option by market cap in the chemical recycling space
Key triggers?
With the raise being our previous immediate trigger, focus for investors should move to development of facility one ahead of production in Q4
Key information on this could also be included in the company’s Q1 report on 25 May
We are long Pyme – our family office invested in the capital raise last week.
https://fitinvestmentideas.com/2022/04/12/nordea-on-pryme-recycling/ |
