Quadrise Fuels International (QFI) booked an interim operating loss of £2.2m. The loss, up by a quarter on the 2013 half-year, was due to increased costs and a share option charge. But the reported figures are largely immaterial as Quadrise moves towards commercialisation of its MSAR emulsion fuel-oil alternative.
Admittedly, management remains frustrated by the slow rate of progress in the latter part of 2014. Quadrise's principal commercial partners, including Saudi Aramco and Maersk, have been reassessing their capital commitments in the wake of the oil price falls, so further delays cannot be ruled out. This applies to the Letters of no Objection (LONO) programme, which is the final phase of MSAR's trial phase prior to large-scale production of marine MSAR.
However, it should be noted that the fall-away in crude oil prices doesn't affect the value proposition of Quadrise's proprietary emulsion fuel. This depends on the spread between the price of heavy fuel oil and distillates (diesel) in the refining process - and there are no concerns on that score.
Despite the re-phasing of key programmes, there are some near-term share-price catalysts in the offing. Quadrise and Maersk plan to sign up a refining partner by the end of the first quarter, which should pave the way for MSAR supply contracts. Quadrise also recently met Saudi officials to agree on a pilot scheme for MSAR.
Peel Hunt gives a discounted cash-flow valuation of 60p a share.
| QUADRISE FUELS INTERNATIONAL (QFI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 11.5p | MARKET VALUE: | £93m | |
| TOUCH: | 11.25-11.5p | 12-MONTH HIGH: | 44p | LOW: 11p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 1.8p* | NET CASH: | £9.8m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | nil | -1.8 | -0.23 | nil |
| 2014 | 0.1 | -2.2 | -0.27 | nil |
| % change | - | - | - | - |
Ex-div:- Payment:- *Includes intangible assets of £2.9m, or 0.36p a share. | ||||
