Global Bioenergies — Update 17 December 2015

Global Bioenergies — Update 17 December 2015

Global Bioenergies

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Global Bioenergies

Step forward ahead of schedule

Operational update

Alternative energy

18 December 2015

Price

€28.1

Market cap

€79m

Net cash (€m) at June 2015

10

Shares in issue

2.8m

Free float

27%

Code

ALGBE

Primary exchange

Alternext

Other exchanges

N/A

Share price performance

Business description

Global Bioenergies is in the scale-up stage to convert renewable resources into isobutene, the first of a number of olefins that will be out-licensed to partners once the process is proved in an industrial pilot.

Analysts

Catharina Hillenbrand-Saponar

+44 (0)203 3077 5700

Roger Johnston

+44 (0)20 3077 5722

Edison profile page

Global Bioenergies is a research client of Edison Investment Research Limited

Global Bioenergies (GBE) has delivered another step on its road towards bringing its isobutene process to industrial scale with the installation of the central fermenter at its Leuna plant. This is important preparation for commercial scale. We anticipate the company will aim to develop end-markets that are uncorrelated to oil while a weak oil price prevails. Our fair value remains unchanged at €35-63 per share.

Year end

Revenue
(€m)

PBT*
(€m)

EPS*
(€)

P/E
(x)

P/Sales
(x)

12/14

3.2

(9.4)

(2.9)

N/A

24.7

12/15e

3.0

(11.8)

(3.9)

N/A

26.3

12/16e

4.7

(10.5)

(3.2)

N/A

16.8

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments

Global Bioenergies has delivered an important step forward ahead of schedule. It has finalised the installation of its central fermenter at the Leuna demonstration plant more than one month ahead of schedule. The fermenter has a capacity of 5,000 litres, which is a material increase at 10x current capacity at the Pomacle pilot plant and is an important test for the technology. The successful operation of this new facility will be a key step to demonstrate scaling-up the technology. The first joint venture at industrial scale, IBN-One is expected to produce 50,000t of isobutene pa, which is yet another significant increase in scale. The company is now looking to connect the downstream unit in Q216, after which the plant is due to be ramped-up in summer next year.

We note that management states it is seeing commercialisation efforts bearing fruit and demand for isobutene test batches, with potential for larger quantities coming in. It is remarkable that this has occurred against the backdrop of an extremely weak oil price. There are many potential end-applications, including agricultural and specialty chemicals that are uncorrelated to oil, which could drive initial demand. As an oil substitute process, however, there is a positive oil price correlation for the isobutene price. A longer-term oil price view will therefore condition investor expectations for isobutene. Overall, the company has delivered step change progress in 2015 with pilot production, several product and process milestones and the first JV. These multiple elements of proof on execution should underpin investor confidence and contribute to de-risking cash flows.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Alliance Trust — Update 16 December 2015

Alliance Trust

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