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Quadrise Fuels International, Emulsion Fuels Pioneer ,Shares Due To Rise?

Jul. 28, 2014 3:57 PM ETQDRSF
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Seeking Alpha Analyst Since 2014

Having worked in the water process, refining and power generation industries for the majority of my life I have a keen interest in energy production and security. Couple this to a keen environmental awarness I have tended to invest in larger companies with strong ecological history or game changing small caps that have the opportunity to change the way industry works.

Quadrise Fuels international.

Immediate priorities

With Quadrise and its partners planning ahead to extend the availability of Marine MSAR® progressively to the rest of the world, Quadrise are already looking for suitable refineries that are close to the NWE bunkering hubs. Importantly they need to select a refinery that can offer a continued supply of residual fuel oil for MSAR production not just for the final LONO trials aboard two Maersk vessels but also to have the capacity to supply fuel for the initial commercial fuel roll out. Presumably the initial roll out will be aboard Maersk vessels or vessels under their control and then, from perhaps late 2015 early 2016 to fleet operators across the world. This will of course be dependent on bringing on stream additional MSAR manufacturing units around the globe.

Share Price

Due to the revised forward plan where the LONO programme launches the commercial phase for MSAR there is increasing speculation on the prospective share price. Rather than look into the distant future and speculate on MSAR replacing HFO as a fuel globally in the marine and power generation sectors ( a situation that would indicate a share price of over £150 per share) it is better that we look at the definite projects that Quadrise are actively pursuing and consider these much smaller but not inconsiderable volumes as a starting point for a realistic share price forecast.

Share price calculations are based on information available from the "Quadrise Shareholders Forum"

Data Used

  1. Peel Hunt Brokers calculate margin per ton MSAR £60
  2. Share of margin split between three partner companies so Quadrise receive £20 per ton.
  3. This gives a possible revenue of £13.50 per ton when operating costs etc are deducted.
  4. Number of share in issue roughly 807 million shares.
  5. P/E ratio of 15 ( a fairly conservative figure .)

Calculations for share price.

(Company Revenue ) divided by the ( Number of shares ) = EPS ( earnings per share )

Share price = (EPS) multiplied by ( P/E ratio ) of 15

Share Price per successful Project

• Maersk: 10 million tons x £13.5 = £135,000,000 per year.

Eps = £0.169.

Share price on P/E of 15 = £2.53

• Saudi Aramco (KSA): 25 million tons x £13.5 = £337,500,000 per year.

Eps = £0.42.

Share price on P/E of 15 = £6.32

• PEMEX (Mexico): 45 million tons (approx) x £13.5 = £604, 941,750 per year.

Eps = £0.75.

Share price on P/E of 15 = £11.25

Future Outlook

While looking at any of the individual share price calculations is very positive the situation is truly game changing when you start to add values together.

With the current share price at around 37p ( up over 10% over the last three months) and the overall project significantly de-risked this share looks due to soar and is remarkably good value at the moment

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