• Euroz maintains speculative buy on Hazer with $0.57 target
  • Hazer hits key milestones with demo plant
  • Graphite product growth could boost Hazer’s long-term value 

 

Investment advisory and stockbroking firm Euroz Hartley has maintained its Speculative Buy recommendation for Hazer Group (ASX:HZR) , with a price target of $0.57 per share (versus current price of $0.40).

The analysts at Euroz noted that there are multiple growth opportunities for HZR.

The company has recently made significant progress, particularly with its Commercial Demonstration Plant (CDP).

The CDP is a facility designed to showcase and scale up Hazer’s proprietary technology for producing hydrogen and graphite from natural gas using a low-cost, low-emission process. The plant is intended to demonstrate the commercial viability of Hazer’s process.

Hazer has completed the CDP test program, running for an impressive 450 hours with 99.6% uptime, which represents the longest successful run to date. This achievement marks a crucial milestone, Euroz said, as it demonstrates the viability of Hazer’s patented hydrogen and graphite production technology.

Also Hazer announced a $5.1 million R&D tax refund, which supplements the company’s cash position of $8.4 million as of the end of September. This cash balance provides Hazer with more financial flexibility as it continues to advance its projects.

“It has been an important year for HZR following the start-up of the CDP in Jan’24 and the achievement of testing milestones, de-risking the Hazer process as a scale-up, and evidence of the commercial credentials of the patented technology for the first time,” said the note from Euroz.

 

Graphite product: a key growth driver

Another crucial development for HZR is the progress made on its graphite product, which is produced in significant quantities as a byproduct of its hydrogen production process.

As Euroz pointed out, “Almost four times as much graphite is produced compared to hydrogen as part of the Hazer process.”

This is important because the graphite could become a substantial revenue stream for the company, particularly as Hazer moves towards commercialisation.

Hazer’s recent efforts to advance the graphite product include high-priority applications that require little to no post-treatment, which could result in higher margins.

Euroz highlighted the potential for higher-than-expected prices, noting that “The pricing for certain high-priority applications could be as much as 50% above our previous estimate of $300 per tonne.”

If realised, this would significantly boost the overall value of HZR’s projects, said Euroz.

 

Long-term growth potential

Euroz’s valuation of Hazer at $0.57 per share is based on the assumption that Hazer will license its technology for ten hydrogen plants, but the valuation applies a 75% risk discount, reflecting the uncertainty of the long-term plan.

The analyst also notes that, should the graphite product achieve a higher realised price, the company could see a significant uplift in value.

“This could add ~$200 million of additional value for a plant owner or ~$7 million in royalties, further demonstrating the materiality of a higher realised pricing for the graphite product,” said Euroz.

 

Catalysts and risks ahead

Looking ahead, Euroz believes Hazer has several key catalysts that could drive its stock price higher.

The company is aiming for the installation of a next-generation reactor in 2025, which would further demonstrate the commercial viability of its technology.

There are also important upcoming events, such as potential licensing agreements for its Canadian project by the end of 2024, and progress on its expansion in markets like Japan, France, and Korea.

“The Canada project license agreement (~end-CY24) and FID (target CY25) could significantly advance HZR’s pipeline of commercial opportunities.”

However, as with any speculative stock, there are risks, particularly around the execution of its long-term plans, added the broker.

For instance, the commercial rollout of HZR’s technology is still in the early stages, and it may take time for the company to establish a solid track record.

 

 

 

The views, information, or opinions expressed in this article are solely those of the broker and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.

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