We reiterate our Reduce recommendation for Metacon but lower our target price to SEK 0.12 per share (previously SEK 0.21) reflecting the negative impact of our estimate changes. Given the ongoing weak market conditions and the lack of new orders, we believe that operational risks have increased. In addition, the falling share price has increased financing risks and is starting to cause uncomfortably high volatility in expected returns and dilution, and we wait for these risks to subside. High potential but also risks associated with commercialization In our view, Metacon’s investment case relies on expectations related to the commercialization potential of the company's product portfolio and significant future business volumes. Currently, Metacon is focused on successfully delivering on its current order book and increasing its order intake, which we see as key short-term drivers. However, the main near-term risks include substantial capital requirements to fulfill large-scale orders and limited financing, which could expose investors to an uncertain degree of dilution in future capital raises. Additional financing is required to continue fulfilling large-scale orders Metacon recently raised approximately 110 MSEK through a rights issue. However, based on our interpretation, only 41 MSEK remains as net liquidity, though we have been unable to confirm this from the company. With an estimated quarterly burn rate of 25-30 MSEK, additional financing will likely be needed by roughly Q2’25. While the large-scale order from Motor Oil may eventually generate positive cash flow, we expect it to initially tie up significant working capital due to collateral requirements. Even with the potential contribution from the TO1 warrants, we believe this will be insufficient to meet estimated capital needs. In our view, a strategic partner-backed directed issue would be the most viable solution to support Metacon’s growth and future order execution. The slow development of the hydrogen market has led us to adopt a more cautious outlook Given that the hydrogen market has continued to develop less favorably than anticipated, i.e., Metacon’s peer Nel temporarily halting electrolyzer manufacturing due to lower-than-expected order intake and project delays, we have adopted a more cautious stance in our revenue estimates for the coming years. Additionally, slower-than-expected order intake (with the last communicated order in mid-Q3) and the long lead times for large-scale projects have led us to reduce our 2025 and 2026 revenue estimates by 10-15%. While the lower revenue outlook has impacted our 2025 and 2026 absolute earnings estimates, the high share of variable costs has partially mitigated the effect. Short-term risk/reward ratio remains thin Our estimated value per share ranges from SEK 0.06 to 0.25 (prev. SEK 0.06-0.45). Given the high working capital requirements for large-scale orders and the uncertainty of whether the company will continue to receive orders regularly, we believe that the drivers currently justify a valuation towards the lower end of the range. In addition, the falling share price has increased financing risks, and the company will need to raise significant financing relative to the current market cap before reaching cash flow neutrality. However, if the company successfully increase its order intake and manage to raise capital at reasonable terms, i.e., through a strategic partner, the current valuation could offer a solid expected return.

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