Quadrise PLC (AIM:QED) continues to offer investors an opportunity for game-changing value creation, with Shore Capital analyst Tom Fraine today highlighting the potential in its anticipated shipping fuel pilot with MSC.
Converting only a small portion of the MSC opportunity can be worth a multiple of Quadrise’s current enterprise value, the analyst said in a note.
Investors were recently very much onboard with this potential, though delays in documenting the envisaged trial agreement between Quadrise and potential partners MSC and Cargill have tempered sentiments.
The London-listed share is down close to 50% in 2024 to date amidst the wait.
Nevertheless, Quadrise chief executive Jason Miles took the opportunity of today’s results statement to posture positively.
“The time for Quadrise technology delivery is now and the team are focused on achieving that goal,” Miles said today, whilst he guided that the ‘pending’ agreement with MSC and Cargill sees activities getting underway at the MAC² terminal, in Antwerp, during the last three months of 2024.
Fuel supply to MSC’s trial vessel is envisaged to follow in first quarter of 2025, he detailed.
Shore Capital’s Fraine described the newly communicated timeline as reassuring.
Working with MSC and Cargill, a major supplier of renewable biofuels and one of the largest private companies by revenue in the world, gives weight and credibility to the Quadrise’s opportunity, Shore Capital added.
“It is reassuring, in our view, that this morning’s RNS includes an updated timetable for the expected commencement of the trial,” Fraine said.
“Investors’ disappointment in the delays has been reflected in the share price, which has roughly halved YTD. The parties intend to conclude a Commercial Supply Agreement during the course of the trial.”
The shipping venture is timely, as the broker highlighted factors supporting the business case.
“We see considerable potential for Quadrise’s fuels to support decarbonisation in shipping and other industries, whilst lowering costs and being safer and simpler to use compared to conventional fuels,” the analyst added.
“Major shipping companies urged the International Maritime Organization (IMO) to create regulatory conditions to accelerate the transition to green fuels at COP28 in Q4 CY23.
“We believe progress in making such regulatory changes could be highly supportive for Quadrise.”
On Monday, in London, Quadrise shares traded up 3.6% changing hands at 1.5p each – valuing the small-cap company at around £28 million.