http://www.afcenergy.com/

Dawnay, Day Corporate Broking Research Note

Aim Admission Document

Aother good day,which in todays market is quite something?
cyril

A trade of 90,000 @ 22p near the end/
cyril

It's twinned with CHAR....lifting off now....

23p and climbing....crikey !..

Seems unstopable,looks like pi's like the technology?
cyril

Up again tomorrow....?...goodie,goodie...

Yes,now paying 25p.
cyril

Floor 26...anybody interested in floor 26...no....doors closing....doors opening...floor 27...anybody interested in floor 27...no...doors closing....

26.27P at present, with pi's still happy to buy?

this Broker note is for 325p year end, can't seem to access it myself?

http://markets.ft.com/tearsheets/analysis.asp?s=AFC:LSE
cyril

You have to sign in for that....

Many investors of AFC will no doubt have been in SEO (stanelco) and will remember all the research posted by a particular member.
There were reams and reams of posts, many predicting huge profits (that famous post predicting 35 before Xmas) many were caught up in the hype of promises, promises.

AFC of late have been predicting big things (AFC believes that a working low cost hydrogen fuel cell is as important to the hydrogen economy as the invention of the internal combustion engine was to the hydrocarbon economy).

So will AFC end up like SEO (present sp of .34p).

Well SEO was built of nothing more than hot air with the odd very small contract thrown in for good measure, whereas AFC are building their sp with good solid contracts, that although few in number look more convincingly like a trickle will turn into a flood.

Although not lead by the hype, I did on my own research put a few grand into SEO believing what I can only state as company untruths (what MP'S call errors of judgement). You can guess how much of that is left (keeping it now against any CGT gain). But AFC are putting their substance into their RNS's and although there are still a few if's mixed in the pot, I have great hope that they will succeed where SEO failed.

On a competitors thread someone asked re the chances of AFC gaining entry to the FTSE 250, well who knows, the if's get bigger, but most companies start off small. AFC might just be one of the very few that make it to the big time, but they are still almost a fledgling company.

Now how about the FTSE 100. OK perhaps getting a bit ahead of myself and going into dreamland? Nice to dream though.

Just come across this from todays report gy Allenby Capital.


News flow from AFC since November 2009 has been stellar. We believe it is only a matter of time before the market values AFC's significant growth potential. Commercial tie-ups with Air Products, Centrica, WSP Group and Linc Energy ("Linc") are testament to the wholesale power producing potential of AFC's high efficiency, zero-carbon, low cost technology. Forecast roll-out of Underground Coal Gasification ("UCG") with Linc, in which carbon capture is free, generates potential 20yr cash flow that changes our fair value upwards from 50m to 207m. This revision assumes a 22% WACC, no green credits, no maintenance income and no growth after 4.2GW of UCG is running by 2021. We rate AFC a Speculative Buy and set a 137p target price.

Projected 4.2GW Linc UCG roll-out by 2021. Based on Australian clean coal major Linc Energy's objectives (ASX: LNC, www.lincenergy.com.au), we project 4.2GW of UCG sites throughout Australia, Europe and the US by 2021.In December, Linc signed a deal with AFC giving it exclusive rights to deploy AFC's technology for power generation at these sites. Sales of AFC's 50kW modular system to Linc at 35K on a 43% margin and a 10% royalty to AFC on power produced generate 20yr cash flow with a NPV of 157m.

Agreement with WSP Group for volume deployment. On Jan 7th AFC announced WSP's wholly owned subsidiary, CEL International will provide extensive expertise and assistance on initial project execution, volume manufacturing and supply chain integration in exchange for first right of refusal on mass deployment contracts. WSP Group is a global design, engineering and management consultancy. This is a key deal in facilitating the mass deployment of AFC's technology in its target markets worldwide. WSP Brisbane will work on the first 300MW Linc UCG site from 2011.

WSP Group and Air Products sign-up for 'Super Green' Power Station. On Jan 19th AFC announced it has entered into agreements with WSP Group and industrial gas producing giant Air Products to build a high efficiency, zero-carbon power station running on pure hydrogen close to AFC's Dunsfold site. The pilot phase of the project will generate 50kW followed by a proposed 1MW facility. The project will both showcase AFC's technology and provide a perfect opportunity for WSP and AFC to co-develop an installation blueprint for roll-out into commercial markets from 2012.

AFC technology chosen by Centrica for zero carbon flagship project. On Jan 27th Centrica announced AFC's technology had been selected to provide 250kW of low cost, zero carbon electricity in a flagship project; the details of which are yet to be announced. Selection of AFC's technology and capacity reservation by utility heavyweight Centrica is further evidence of its high efficiency, wholesale energy generation potential in industrial markets.

Alpha system demonstration at Akzo should unlock value. AFC is on track to install and perform an extended run of its alpha/beta commercial system on site at Akzo Nobel. We believe that successful demonstration will validate the technology and unlock some of the clear potential value AFC's technology has in global wholesale energy markets backed by solid deals.

(16 page Report)
cyril

137p.....blimey !...anyway...the sp is off again on an upwards climb by the look of it.

Back up 9.5% on fairly low volume. Just proves the MMs were playing games.
Wonder how many of yesterdays sellers are kicking themselves.

Edit.....Ticked up as I posted. I wonder how many will be tempted to sell today. Don't know the correct term but I term it as a reverse tree share, IE tempting the sellers instead of frightening them as yesterday.

I would hate to have to sell....this is the potential that ITM never had....

Buying is relentless back up to 27.75p the offer.Kicking myself for nnot topping uo yesterday afternoon and again this am.The momentum is with us?
cyril

Up again....I'm starting to wonder if this will turn into the biggest riser of the year....and not one of the oil stocks....

Seems to have bottomed out today,increased my holdings at just over 24p which i'm hoping is the support level?
cyril

Just wondering how far this is going to go.....is it best to stay put longterm ?, or at some stage to take profits ?....and come back later.....the jury is out for me on this one....difficult to judge the fuelcell ones...unlike oil stocks where you can plan a little ahead.

Looks like brimg pushed in the 3 i's board, here's a sample.

Try reading all the posts from last weekend on iii.

If the 4.2GW power station is built, then in 2021 the SP would probably be over 3000p (30) a share.

The 137p target is an NPV - basically what the SP should be trading at now. Even if one knocks 50% off that then we arrive at 70p.

The Australian government are (according to the Linc CEO) placing tremendous pressure on Linc to get on with it and order the inital 300MW.

Value AFC the same as CFU and the share price would be about 75p.


(following taken from Stocasity on iii)


Sales of AFC's 50kW modular system to Linc at 35K on a 43% margin and a 10% royalty to AFC on power produced generate 20yr cash flow with a NPV of 157m.



Linc said they were looking at 200MW to 250MW for stage 1 of the UCG power:

200MW = 4000 units at 35k = 140,000,000
43% of 140,000,000 = 60,200,000 gross profit
Power = 10% of 48 per MW/h for 7,884 hours per year = 7,568,640 per annum
Water = 33.33% of 7,568,640 = 2,522,627 per annum
Annual maintenance fee = 2,625 x 4,000 = 10,500,000 per annum
ROC/CHP/green energy subsidy = 10% of 35 x 200MW x 7884h = 5,518,800 per annum

250MW = 5000 units at 35k = 175,000,000
43% of 175,000,000 = 75,250,000 gross profit
Power = 10% of 48 per MW/h for 7,884 hours per year = 9,460,800 per annum
Water = 33.33% of 9,460,800 = 3,153,284 per annum
Annual maintenance fee = 2,625 x 5,000 = 13,125,000 per annum
ROC/CHP/green energy subsidy = 10% of 35 x 250MW x 7884h = 6,898,500 per annum



However, in the latest Allenby note it says Linc stage 1 will be 300MW:

300MW = 6000 units at 35k = 210,000,000
43% of 210,000,000 = 90,300,000 gross profit
Power = 10% of 48 per MW/h for 7,884 hours per year = 11,352,960 per annum
Water = 33.33% of 11,352,960 = 3,783,941 per annum
Annual maintenance fee = 2,625 x 6,000 = 15,750,000 per annum
ROC/CHP/green energy subsidy = 10% of 35 x 300MW x 7884h = 8,278,200 per annum



Linc stage 2 raising capacity to 500MW, 2 years later:

500MW = 10,000 units at 35k = 350,000,000
43% of 350,000,000 = 199,500,000 gross profit
Power = 10% of 48 per MW/h for 7,884 hours per year = 18.921.600 per annum
Water = 33.33% of 18.921.600 = 6,306,569 per annum
Annual maintenance fee = 2,625 x 10,000 = 26,250,000 per annum
ROC/CHP/green energy subsidy = 10% of 35 x 500MW x 7884h = 13,797,000 per annum



Allenby think Linc have potential for 4.2GW on their own projects:

4.2GW = 84,000 units at 35k = 2,940,000,000
43% of 2,940,000,000 = 1,264,200,000 gross profit
Power = 10% of 48 per MW/h for 7,884 hours per year = 158,941,440 per annum
Water = 33.33% of 158,941,440 = 52,975,181 per annum
Annual maintenance fee = 2,625 x 84,000 = 220,500,000 per annum
ROC/CHP/green energy subsidy = 10% of 35 x 4200MW x 7884h = 115,894,800 per annum

Work that lot out as EPS with just 150m shares in issue!!


Seems to me the word is out that this is something special,so could fly once again,a nice little RNS would put a rocket to it?
cyril