Ecoslops turns oil slops into traditional oil products and makes for a cleaner planet in the process. Its pocket sized refinery like process, first set up in Sines (Portugal) has been a FCF cash flow generator from 2017 with more to come from other sites.
In addition Ecoslops expects to deliver by early 2019 a “refinery in a box” prototype that would cater for a wider market of slops to be found in smaller ports.
We have upgraded our target price by c. 20%
The upgrade allows for final 2017 figures which confirm that the Sines plant is in FCF mode and thus can be valued less as a project and more as a cash cow.
Other units in the pipeline have been similary upgraded.
2017 earnings have been more than breaking even which was not a given and provides a sound base for the following years.
The upgrades to 2018 and 2019 reflect improving operating conditions as realisation prices for refined products are somewhat more attractive than nine months ago.
The rise in inputs (slops) does not offset these realisation gains.
The NAV computation is now based on the 2020 EBITDA for Sines and time-adjusted similar multiples for other refining units as they are gradually fired up.
We have allowed for a cautious valuation for smaller « refinery in a box » Mini P2Rs soon to be tested.
The DCF has been revised to only allow for projects currently in the pipeline.
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