Green energy technology designer AFC Energy (AFC:AIM) has declared success in developing a second generation fuel cell system. This latest one makes the fuel cell stack last longer and is cheaper to build, ergo buy.
This comes after progress reported in July on two fronts; completing the design work on a fairly small 10kW (kilo watt) cartridge system, and finish the basic design and engineering on a much bigger, more powerful system capable of producing 1MW (mega watt) of power.
This is all part of a complex milestones development plan.
AFC has been in the game of fuel cell design to generate power for many years.
Backed by Chelsea FC-owner Roman Abramovich, its hydrogen, oxygen chemical reactions technology is based on power units designed for space flight in the 1960s.
AFC’s version is aimed at making large scale, heavier cells that can be used at big industrial plants which are typically large users of electricity.
The latest news has got investors excited. The share price has jumped by 25% to 23p, valuing the business in excess of £70m.
The business is basically pre-revenue. It is forecast to report £0.8m of income for the full year to 31 October 2016, most of which will be design partner payments. Operating losses are estimated at circa £8m.
Analysts are optimistic that a self-funding, commercial business is buried within AFC.
The 2019 financial year is expected to be the point at which it starts to make a profit.
Analysts forecast £4.5m pre-tax profit for that period, although that’s based on nearly £50m revenue.
You should expect more large losses at least until then, perhaps longer. Cutting edge technology usually takes longer to come to market than planned.
Investors may also be tapped for more cash. At the end of April AFC had £2.84m of net cash on its books.
