Quadrise — Tests identify new pathway to bioMSAR Zero

Quadrise (AIM: QED)

Last close As at 04/03/2024

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Research: Industrials

Quadrise — Tests identify new pathway to bioMSAR Zero

Quadrise has announced final test results for potential low-carbon marine fuels. The tests demonstrated that bioMSAR blends containing Vertoro’s crude sugar oil (CSO) reduced carbon dioxide (CO2) emissions by over 30%, while increasing engine efficiency by up to 7% and significantly lowering emissions of nitrogen oxide (NOx) and carbon monoxide (CO) compared to diesel. Formulations incorporating biofuels containing waste-based methyl esters lowered CO2 emissions by up to 45%, increased engine efficiency by up to 7% and reduced NOx and CO emissions compared to diesel, providing a new pathway to bioMSAR Zero.

Written by

Andrew Keen

MD - Head of Content, Energy & Resources, Industrials

Industrials

Quadrise

Tests identify new pathway to bioMSAR Zero

Alternative energy

Spotlight - Flash

8 December 2023

Price

2.42p

Market cap

£38m

Share price graph

Share details

Code

QED

Listing

AIM

Shares in issue

1,562m

Net cash at end June 2023

£1.3m

Business description

Quadrise is the innovator and global supplier of disruptive fuel blending technology that produces a synthetic, enhanced fuel oil called MSAR and a biofuel called bioMSAR. The technology provides a low-cost and cleaner energy for marine, power and industrial applications.

Bull

bioMSAR gives better CO2 reductions and cost savings than existing biofuels.

Adoption of MSAR improves economics of refinery production and upstream operations

Adoption of MSAR reduces costs and emissions in marine bunker, industrial and power markets.

Bear

Economics of adoption dependent on oil product spreads.

Ability to progress trials adversely affected by many factors outside Quadrise’s control.

Size of company limits number of projects that can be progressed at any one time.

Analysts

Andrew Keen

+44 (0)20 3077 5700

Harry Kilby

+44 (0)20 3077 5724

Quadrise is a research client of Edison Investment Research Limited

Quadrise has announced final test results for potential low-carbon marine fuels. The tests demonstrated that bioMSAR blends containing Vertoro’s crude sugar oil (CSO) reduced carbon dioxide (CO2) emissions by over 30%, while increasing engine efficiency by up to 7% and significantly lowering emissions of nitrogen oxide (NOx) and carbon monoxide (CO) compared to diesel. Formulations incorporating biofuels containing waste-based methyl esters lowered CO2 emissions by up to 45%, increased engine efficiency by up to 7% and reduced NOx and CO emissions compared to diesel, providing a new pathway to bioMSAR Zero.

Historical performance

Year
end

Revenue
(£m)

EBITDA
(£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

06/20

0.00

(3.0)

(3.3)

(0.32)

0.00

N/A

06/21

0.02

(2.8)

(2.8)

(0.23)

0.00

N/A

06/22

0.08

(2.7)

(2.8)

(0.19)

0.00

N/A

06/23

0.00

(3.0)

(3.1)

(0.21)

0.00

N/A

Source: Company accounts. Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Quadrise has been collaborating with biorefinery specialist Vertoro since September 2022 to develop a cost-effective supplement or alternative to glycerine in its bioMSAR. The tests concluded in November and the blends used contained up to 40% of Vertoro’s CSO as a renewable replacement for glycerine. In comparison to conventional diesel, the test fuel reduced total CO2 emissions by over 30%, increased engine efficiency by 7–8% and reduced NOx and CO by roughly 30% and over 50%, respectively, while producing negligible visible smoke.

After these positive results, Quadrise has scheduled further testing of the 40% CSO bioMSAR and 40% glycerine-based bioMSAR on a larger medium-speed Wärtsilä engine at the VTT Technical Research Centre of Finland in H124, in parallel with the testing of CSO in bioMSAR at levels over 40% at Quadrise’s research facility and at Aquafuel. Progress is also being made with the company’s joint development agreement with BTG Bioliquids on pyrolysis sugars derived from biomass and with alternative prospective partners that could supply C5 and C6 sugars on a commercial scale.

Quadrise tested blends of bioMSAR incorporated with B30, a marine biofuel of 30% methyl esters blended with fuel oil. In this first phase of testing, blends were made with up to 70% B30 and up to 40% glycerine. When comparing the B30 infused fuel to diesel, the results showed up to a total of 45% well-to-wake CO2 reductions (based on carbon intensity) and enhanced engine efficiency of 3–7%. There was also a corresponding reduction in fuel costs, a reduction in NOx emissions of 43–59% and CO savings of 58–76%, with negligible visible smoke. The successful B30 results provide a pathway to further reduce the fossil fuel content of Quadrise’s emulsion blends by using methyl esters. Next phases of testing will use higher concentrations of waste-based methyl esters and ultimately B100 combined with glycerine or biomass-derived sugars. Quadrise is aiming to demonstrate a commercial bioMSAR Zero product well ahead of its 2030 target.

General disclaimer and copyright

This report has been commissioned by Quadrise and prepared and issued by Edison, in consideration of a fee payable by Quadrise. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

General disclaimer and copyright

This report has been commissioned by Quadrise and prepared and issued by Edison, in consideration of a fee payable by Quadrise. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2023 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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