Hexicon will publish its Q1 results on Wednesday, May 28, at 8:00 am CEST. We expect Hexicon’s revenue to remain modest in Q1, primarily driven by consulting fees. Looking at the bigger picture, we believe project divestments will be the company’s main growth driver in the coming years. Accordingly, we look forward to further updates on potential divestments, particularly the strategically important MunmuBaram project. We will also pay close attention to the company’s comments regarding its financing needs.

We reiterate our Sell recommendation for Hexicon but increase our target price to SEK 0.20 per share (prev. SEK 0.14). While we view the recent divestment as positive, as it reduces the financing risk somewhat and indicates confidence in the company’s ability to divest early-stage projects successfully, we believe that the valuation has risen to high levels. Additionally, we anticipate the need for further financing in the coming months, leading us to perceive the risks as too great for the time being to rely on the potential.

Hexiconin Q4-raportti ei sisältänyt suurempia yllätyksiä. Haastavassa toimintaympäristössä yhtiö kokee edelleen pitkiä divestointiprosesseja ja -neuvotteluja. Tämän seurauksena odotamme MunmuBaram-projektin pitkän aikavälin omistusrakenteen muodostumisen, joka voisi tarjota lyhyen aikavälin rahoitusta ja parantaa projektikehityksen kassavirtaa, viivästyvän kesään 2025 asti. Näkemyksemme mukaan yhtiö tarvitsee lisäpääomaa tulevina kuukausina, mikä pakottaa Hexiconin tutkimaan muita rahoitusvaihtoehtoja epävarmoilla ehdoilla. Tämän taustalla näemme lyhyen aikavälin riski/tuotto-suhteen epäsuotuisana.

Recent developments in Hexicon’s project portfolio have been mixed, in our view. While the MunmuBaram project finally received regulatory approval, the Swedish Government rejected two key projects, affecting the valuation negatively. Furthermore, Hexicon is still in need of immediate cash infusion, and we believe it will be difficult for the company to overcome the downward pressure from the expected equity issue, the high cash burn, and the remaining question marks concerning the structure of the MunmuBaram divestment. Against this backdrop, we believe that the near-term risk/reward profile is unfavorable. Consequently, we revise our recommendation to Sell (was Reduce) and lower our target price to SEK 0.14 (was 0.23), reflecting the negative impact of the reduced net capacity in the project portfolio and aligning with our SOTP valuation.