The inauguration of the Leuna demo plant marks another step forward for Global Bioenergies’ execution strategy. The fab is delivering good yields and the quality of the isobutene is better than expected. The company has also announced that it has received new EU grant funding for adaptation of its second-generation process. The next steps are execution on IBN-ONE, GBE’s first commercial joint venture at an industrial scale, securing financing from 2018 and further commercial licensing agreements. Our fair value remains unchanged at €35-63 per share.
Written by
Global Bioenergies |
Reaching scale |
Operational update |
Alternative energy |
22 May 2017 |
Share price performance
Business description
Analysts
Global Bioenergies is a research client of Edison Investment Research Limited |
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The inauguration of the Leuna demo plant marks another step forward for Global Bioenergies’ execution strategy. The fab is delivering good yields and the quality of the isobutene is better than expected. The company has also announced that it has received new EU grant funding for adaptation of its second-generation process. The next steps are execution on IBN-ONE, GBE’s first commercial joint venture at an industrial scale, securing financing from 2018 and further commercial licensing agreements. Our fair value remains unchanged at €35-63 per share.
Year |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/15 |
2.2 |
(12.2) |
(4.0) |
0.0 |
N/A |
N/A |
12/16 |
3.3 |
(12.4) |
(3.4) |
0.0 |
N/A |
N/A |
12/17e |
3.7 |
(15.7) |
(4.0) |
0.0 |
N/A |
N/A |
12/18e |
3.7 |
(16.7) |
(4.2) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments.
We attended the inauguration of GBE’s demonstration plant in Leuna. This is an important step in scaling up and industrial production. We were impressed to hear that the actual purity of isobutene at Leuna has exceeded that of previous batches at the Pomacle plant. The company attributes this to improved fine-tuning, the integration of equipment and a more integrated loop back process at greater scale. Production at the new plant will also increase credibility with commercial partners and support the commercialisation. The next step is the construction of the fab of IBN-ONE, the first joint venture with Cristal Union. GBE has confirmed that the project is on track. Production close to commercial scale at Leuna is a key stage for progress towards the IBN-ONE fab. Financing structures are as yet not clear. We estimate, however, that GBE will need to consider financing options irrespectively, from 2018. At the same time, management is looking for another licensing deal.
GBE’s partner Audi sees GBE as a key partner for its integrated renewable fuel concept for its fleet. This demonstrates strong support from this important industrial partner. GBE has also announced €4.4m of new EU grant funding for a new process to demonstrate isobutene production from wheat straw. This is in consortium with Clariant, Ineos, IPSB, Technip and the University of Linz. It will further support feedstock and end market diversification for the company. Our fair value range remains unchanged at €35-63/share.
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Research: Energy & Resources
SDX Energy has released its first quarter 2017 results, the first period incorporating its recent acquisition of Egyptian and Moroccan assets. As expected, hydrocarbon sales rose significantly, totalling 2.991mboe/d and more than doubling year-on-year, while oil netbacks also increased markedly to $44.4/boe. During the period, the company successfully drilled the South Disouq well, proving a gas resource that could start production within 12 months. We leave our NAV unchanged at 76p/share, and await the results of testing the well in the coming weeks.