Metacon Q2'25: Progressing in the right direction
Overall, Metacon’s Q2 report was good and broadly in line with our expectations. Our key takeaway from the report was that the large-scale Motor Oil project timeline remains intact, which is positive as milestone payments strengthen the financial position by supporting cash flow for both ongoing operations and new orders. As a result, we believe that the financing conditions have improved, and we are not overly concerned about short-term financing. With improved near-term revenue visibility, where our 2025 revenue estimates are largely “secured” by the existing order book, we still believe the current valuation offers an attractive risk/reward profile. As a result, we reiterate our Accumulate recommendation with an increased target price of SEK 0.30 (was SEK 0.23), reflecting the reduced risk level.
Q2 broadly in line with our expectations
Metacon’s Q2 revenue came in at 56.7 MSEK, representing a strong year-on-year increase, broadly in line with our expectations and primarily driven by the large-scale Motor Oil project. While revenue execution was positive, the gross margin was below our forecast, partly due to a weaker underlying margin, but also as a result of a one-off inventory adjustment. However, effective cost control resulted in slightly lower operating expenses, leading to absolute EBIT only slightly below our estimates.
While the operating profit improved, Q2 operating cash flow was relatively on par (-26.5 MSEK) with last year’s level, mainly due to increased working capital requirements. However, in Q2, Metacon fulfilled the requirements for the release of the advance guarantee, leading to available cash of 72.8 MSEK at the end of the quarter. In addition, Metacon has communicated that the company will receive and additional payment in Q3 of around 165 MSEK linked to the achievement of milestones in the Motor Oil project. As a result, we are not overly concerned about the short-term liquidity situation. In the longer term, however, sustained order flow is required for Metacon to rely on its own cash flows.
Our estimates remain largely intact in absolute figures
Following the Q2 report, we have made only minor adjustments to our revenue estimates, as performance broadly met expectations. We estimate the current order backlog at 240 MSEK, primarily from the Motor Oil order, which we expect will largely be recognized as revenue this year. For 2026-2027, we estimate that the company will receive 3-5 new large-scale electrolysis orders, depending on size, which will drive revenue growth in the coming years. In terms of profitability, given that gross margins have came in below our expectations for two consecutive quarters, we have slightly lowered our estimates. We now expect Metacon to achieve gross margins of 20-25% in the coming years, reaching around 30% long-term due to better capacity utilization, stronger market position and increased aftermarket services. Despite lowered gross margin estimates, our OPEX estimates remain largely unchanged, leading to only minor downward revisions to earnings.
Risk/reward still attractive at current valuation
Our estimated value per share ranges from SEK 0.16-0.51 per share (was 0.12-0.47 per share), which is slightly higher than our previous range. This is mainly due to improved short-term financing conditions reducing expected dilution. This range is also supported by our DCF. In our view, with the significantly stronger order inflow that Metacon has showed during the past year, the company is better positioned to achieve broader commercialization. However, uncertainty remains about the company's ability to secure additional large orders on a consistent and profitable basis. This means that the forecast risks are still high, which makes it difficult to justify the upper end of our valuation range. Given these factors, we raise our target price to SEK 0.30 per share (was SEK 0.23), which is still at the lower end of the range.