Quadrise PLC (AIM:QED)'s latest fuel trial news is another "highly encouraging" milestone, according to analysts at stockbroker Shore Capital, which reckons the alternative fuel firm could more than double in value as it advances towards commercialisation.
The London-listed small-cap is among the top performers in the second half of 2024, with the shares up some 190% in the past month as key deals show progress.
Its latest, a potential partnership with a power plant in Panama, announced on Monday, is a great opportunity for the company to gain valuable experience in the power sector, Shore Capital analyst Tom Fraine said in a note.
The Panama deal builds on several similar fuel pilots and tests that promise to unlock a significant commercial opportunity for Quadrise and its diesel-alternative fuels MSAR and BioMSAR.
Its most advanced is the MSC vessel trial which will see the global shipping giant test Quadrise fuels in the first quarter of 2025 – using some 1,000 metric tons of the bioSAR and MSAR.
News confirming the timeline for the MSC trial was the catalyst for the sharp rise in the Quadrise value in recent weeks, and success could unlock a substantial commercial opportunity.
According to Shore Cap’s Tom Fraine, the firm could see income equivalent to $50 per tonne of fuel consumed.
“This opportunity with MSC and Cargill alone could be worth a multiple of Quadrise’s current enterprise value in potential high-margin annual revenues if only a small percentage of MSC’s overall fuel demand was switched to MSAR or bioMSAR,” the analyst said.
“MSC currently consumes close to 10m tonnes of fuel oil annually,” he added.
In Panama, Fraine reckons the power plant operator can consume up to 100,000 tonnes a year of heavy fuel oil.
“We are encouraged to see the momentum of positive news flow continuing and note the considerable potential for high-margin revenues to be generated from Sparkle and other power suppliers in Panama,” he said.
In London, Quadrise shares rose by around 10% on Monday to trade at 4.47p each, valuing the company at around £80 million.
The stock is up some 190% in the past month.