Equity Research Zazz Energy: Further delays, capital raise in the cards

Zazz Energy announced today, October 6, 2023, that the restart of the Amfilochia plant has been further delayed to November 20, 2023. The previously announced date was October 15, 2023. This is the latest in a series of delays over the past six months. On 8 May, the company announced that the restart would take place on 30 June. This was later postponed to August 15. Shortly thereafter, there was a new announcement of a restart on September 15, which was later moved to October 15. The latest announcement is now a restart no later than 20 November.

As per the company’s press release, the most recent delay is attributed to storm Daniel, which resulted in damage to a supplier.

Due to the delay, Carlsquare Equity Research has revised down the motivated value per share to SEK 0.11 per share, a decrease from the previous valuation of SEK 0.30 per share. Initially, our valuation was based on the assumption that the Amfilochia plant would commence revenue generation in November 2023. We still see a high risk of further delays to the restart. Consequently, in our updated scenario, we assume zero revenue for the entire year 2023. Furthermore, we have factored in risk adjustments for additional delays, forecasting zero revenue in Q1 2024 as well. As mentioned in our research update from August 25, 2023, it is worth noting that the company is also in need of raising capital in the near future. Should a new issuance occur at the current share price, it will result in substantial dilution. In our scenario, we have assumed a new issuance of at least SEK 24.6 million within the next six months.

We reiterate that the risk around Zazz Energy is currently very high.

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