Sparebank1 Markets kommer i dag med kjøpsanbefaling i VGM med un-risked NAV 15,4 kroner pr aksje.

Ingressen fra analysen i dag 22. september:

We initiate coverage of Vow Green Metals (VGM) with a Buy recommendation and target price of NOK 11 /share.

Our NOK11/share TP is based on VGM reaching 100,000 tonnes of biocarbon production capacity or ~10% of addressable market in Norway. We calculate an un-risked NAV of NOK 15.4 per share using a WACC of 8% and assuming that VGM will reach 100,000 tonnes of biocarbon production. We use a discount of 30% to incorporate the risks related to process scaling and requirements of additional funding. Considering potential dilution effects, our target implies VGM being able to fund only 25% of future CAPEX with debt and raise equity at the average of last 30 days VWAP, i.e. well below our current TP. Our target price implies a 2025e EV/EBIT multiple of 21x, but only 14x if capacity already invested in reaches 100% utilization.

Using already proven and tested VOW pyrolysis technology, the company will build, own and operate production facilities converting waste biomass into high quality biocarbon, syngas and bio oil. Biocarbon, which is the most valuable output product, is a CO2 neutral material which can be utilized as a direct substitute of fossil based reducing agents (used to remove oxygen atoms from ore molecules). More than 5% of CO2 emissions in Norway currently come from fossil based reducing agents, and in several metallurgical processes, such as silicon and manganese production, reducing agents account for almost 90% of total greenhouse gas emissions related to production. Hence, demand for biocarbon is driven by the fact that several metallurgical companies are dependent upon emission free reducing agents to limit their climate footprint. At its first production facility in Follum, Norway, expected to be finalized during the summer of 2022, VGM has already secured strong partnerships including a biocarbon offtake agreement with Elkem. By 2030, the Norwegian silicon producer has stated that it targets to use 40% biocarbon in its production process implying around 150,000 tonnes per annum, which stands in contrast to a current European production of only ~20,000 tonnes and a first phase capacity of 10,000 tonnes at VGM’s Follum site. Our target price and valuation are based on VGM reaching 100,000 tonnes of annual biocarbon production, less than Elkem’s 2030 target and approximately 10% of the addressable market in Norway.