Swedish Stirling
Swedish Stirling - PWR BLOK outlook looking even brighter (ABG Sundal Collier)

2020-07-01 22:06
MoU with Samancor for a potential 135 PWR BLOKs
Could provide SEK 700m in sales given current pricing
Estimate gross margin of ~40% at 129 PWR BLOKs
Memorandum of Understanding for 135 PWR BLOKs
Swedish Stirling announced on 1 July that it has entered into a Memorandum of Understanding (MoU) in relation to the potential installation of 135 PWR BLOKs at three Samancor smelters located in Mooinooi, Emalahleni and Burgersfort in South Africa. We have previously updated on Swedish Stirling’s ongoing deal with Samancor at its TC Smelter, where one PWR BLOK is currently being installed as a pilot facility. We anticipated that the TC Smelter facility could provide further business with Samancor but did not expect it to occur before the first PWR BLOK had been put through its paces. The MoU proves Samancor’s confidence in the product and its continuous work to find a way to reduce its energy costs. As one of South Africa’s two largest ferrochrome producers is putting its faith in the PWR BLOK, the global ferroalloy market is likely to take notice.

A step closer towards direct sales and profitability
Details surrounding the deal are to be announced at a later date, but given the size and Samancor’s apparent interest in the PWR BLOK it is not unlikely that this deal could be the starting point for outright PWR BLOK sales (as opposed to the current conversion service). The pricing of one PWR BOLK is currently around EUR 500k, meaning the potential 135 unit deal could provide sales of ~SEK 700m, providing ample upside potential to estimates, which are currently for 59 units until 2023. Swedish Stirling estimates a breakeven point at 24 units and a GM of ~40% at ~128 units.

New hire with clear focus on global sales and marketing
Last week the company also announced a new role, Global Head of Sales and Marketing. This role has been lacking in our opinion and will be an integral part in developing sales and business strategies going forward, especially as the company is targeting new geo
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