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Quadrise becalmed as trial vessel dry-docks

The alternative fuel maker is becalmed pending resumption of its Maersk sea trial
March 28, 2017

Those of a classical bent might point to Quadrise Fuels' (QFI) journey towards commercialisation as essentially Odyssean in nature. The sea trial of its proprietary MSAR marine fuel had to be suspended after the trial vessel was forced to make unscheduled repairs. Like Penelope, Queen of Ithaca, shareholders in Quadrise are now effectively in limbo, enthral to the whims of Danish shipping giant Maersk - as opposed to the enchantress Calypso, the cause of Odysseus' own delays.

IC TIP: Buy at 8.11p

The Maersk sea trial is unlikely to recommence before the fourth quarter of this year - a major frustration for shareholders, although they can take some solace from the performance of MSAR on the marine test thus far. Management has been making positive noises about the interim LONO (letter of no objection) with engine maker Wärtsilä, together with some suitably vague comments on prospects for a separate combustion trial in Saudi Arabia.

Numbers at the half-year mark are of secondary import, save for the £2.2m cash outflow from operating activities and the £7.0m in cash at the period-end, courtesy of October's oversubscribed open offer. There's also accumulated tax losses of £43m available against future profits.

Prior to the stalled sea trial, Peel Hunt gave a discounted cash flow valuation of 41p a share, with a net present value of 18.5p given to the marine form of MSAR.

QUADRISE FUELS (QFI)
ORD PRICE:9.91pMARKET VALUE:£85.4m
TOUCH:9.90-9.91p12-MONTH HIGH:15pLOW: 7p
DIVIDEND YIELD:NILPE RATIO:NA
NET ASSET VALUE:1.3p*NET CASH:£7m

Half-year to 31 DecTurnover (£'000)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20152.0-2.4-0.3nil
201668.0-2.4-0.3nil
% change+3300---

Ex-div:-

Payment:-

*Includes intangible assets of £2.9m, or 0.3p a share