RE: Sell Ceres to buy Fresnillo?7 Sep 2025 20:27
Unplugged , . post
Assessment of the Core Comment on Ceres Power
At its heart, this comment is a reality check on Ceres Power’s current fundamentals—spotlighting limited cash runway, absence of profitability or dividend, and high operational burn—while warning against chasing a “story stock” without tangible revenues. Below is a point-by-point evaluation.
1. Cash in the Bank
Claim: Ceres holds cash reserves but nothing more.
Reality: As of early September, market chatter pegs cash at around £78–80 million, which must fund R&D, overhead and pilot programmes until licensing revenues arrive.
2. Partnerships and Awards
Claim: Ceres has deals and industry recognition but no recurring income.
Reality: Trials with Doosan, Shell and others validate the technology, and Innovate UK grants and clean-energy awards underscore progress. However, partners are still in pilot or low-volume phases, so royalties haven’t yet flowed.
3. Profitability and Dividends
Claim: No profit and no dividend.
Reality: Ceres remains pre-profit; it has never paid a dividend and won’t until it can demonstrate sustainable royalty or product revenues.
4. Geographic Footprint
Claim: No presence in EU or US.
Reality: Ceres’s manufacturing partners are primarily in Asia at pilot scale. There’s no direct factory or large-scale deployment yet in Europe or North America.
5. Operational Burn and Headcount
Claim: Cash burn is massive; the payroll is large for a non-production entity.
Reality: With several hundred employees spanning R&D, engineering and pilot-line operations, overhead runs high. Until serial production or licensing fees kick in, burn will remain elevated.
6. Board Remuneration and Bonuses
Claim: Directors are richly paid despite limited commercial success.
Reality: Executive compensation in deep-tech often includes bonuses tied to milestones (e.g., first licensing deals). Investors should compare pay-for-performance metrics against peers to judge fairness.
7. Short Interest and Stock Dynamics
Claim: Heavy shorting makes a multi-bag return unlikely and adds downside risk.
Reality: Public data shows notable short positions absorbing overhang; if fundamentals disappoint, forced covering could amplify declines, while a licensing surprise could spark a squeeze.
Overall Take
The comment accurately flags that, right now, Ceres is still a “story stock” lacking concrete revenue or profit. Cash reserves will have to stretch through ongoing pilots before royalties arrive.
For investors seeking clear cash flow, dividends or near-term profitability, there are better candidates. If you’re comfortable with high burn, long runway and the hope of sizeable licensing deals in 3–5 years, Ceres could reward patience—but only once the model proves out.
Further Angles to Explore
Listen in on the interim results podcast (26 September) for updated cash-burn guidance and pilot timelines.
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