Ardenthis morning16 Dec 2021 08:08
EQTEC has released an update on two strategic partnerships. The first is a new framework agreement with H2 Energy Solutions, a German hydrogen project development and principal investment company, to jointly define and pursue waste-to-hydrogen projects, particularly in Germany and Turkey. Any projects formally pursued would be subject to further commercial terms, and there are already two opportunities in Germany that have been identified by the two companies.
The H2 Energy collaboration follows the potential addition of a hydrogen element to EQTEC’s Deeside project in the UK, and a collaboration agreement with Wood for joint development of hydrogen production solutions using syngas (as produced by EQTEC’s gasification technology). As such, in our view today’s news represents further augmentation of the hydrogen leg of EQTEC’s business, while also continuing to demonstrate the versatility of the company’s gasification technology.
The second is a deepening of the existing strategic partnership with MetalNRG, announced earlier this year. EQTEC has already purchased £500k of MetalNRG shares (MetalNRG is itself UK listed), and today’s update reports this partnership being augmented via a £300k share swap. Overall, this will leave EQTEC holding 14.1% of MetalNRG. MetalNRG is a natural resources investment company in the process of diversifying its portfolio via biomass investments, and is already an investment partner in EQTEC’s Italia MDC biomass-to-energy project. This augmentation of the existing agreement should help further cement the partnership between the two companies, potentially assisting with funding for future EQTEC biomass projects, in our view.
No change to forecasts; our DCF-based valuation remains at 4.9p, and we have a Buy recommendation.
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