OptiCept initiates pilot projects with several prominent companies within the cuttings area
OptiCept, through its partner BCC, has announced the signing of evaluation agreements with several prominent forestry companies and growers in South Africa. According to the announcement, the agreements currently involve three companies, with five more expected to join. These companies will evaluate OptiCept's patented OptiBoost technology to improve the rooting and quality of forestry cuttings in their operations. According to OptiCept, these agreements could potentially lead to the treatment of more than 100 million cuttings per year. While we view the news as positive and indicative of significant interest in the technology from major players, we are not making any changes to our estimates and recommendations at this time given the early stage of the projects.
Initially, the potential customers will test OptiCept's patented vacuum impregnation technology on selected cuttings of various tree species over a 12-month period to find the optimal solution. The trial is scheduled to begin in Q3'24 and the participating companies will share the costs. Among the companies evaluating OptiCept's technology are Mondi Group, a multinational packaging and paper group that produces approximately 30 million cuttings per year; Sappi, a leading global supplier of wood fiber-based products that produces approximately 35 million cuttings per year; and Sutherland Seedlings. In addition, OptiCept expects five other companies to evaluate the technology, collectively producing over 40 million cuttings per year.
If successful, announced projects could help OptiCept reach a wider commercial scale within the cuttings industry
OptiCept has previously communicated that the OptiBoost machine used for cuttings, called Saga, treats up to 400 cuttings in 40 seconds. A single machine can cover an annual range of 10-30 million cuttings, depending on the customer's internal conditions. We believe this level of efficiency is quite good, considering that a single machine can meet the annual planting requirements of large companies such as the Mondi Group or CMPC, one of the world's largest pulp and paper companies. In addition, we believe that OptiCept's technology can play an important role in enhancing plant strength and accelerating growth, providing multiple benefits to the forest industry. OptiCept generally improves the survival and rooting of various cuttings, with a particular focus on improving high-yielding varieties that are typically difficult to root. This could potentially lead to a shift towards more efficient and higher yielding forest plantations for its customers. Robust plants result in fewer replantings, saving both cost and effort for growers. In addition, these resilient plants have improved resistance to pests and disease, contributing to overall forest health.
The company has previously entered into two commercial agreements for cuttings, albeit for small initial volumes. The company's strategy in the cuttings sector, consistent with the recent announcement, is to attract industry leaders. We believe this strategy can be time-consuming due to the complexity of large companies, which often have multiple units requiring approval for new technologies. On the other hand, successfully establishing OptiCept's technology with an industry leader could position the company to influence the broader market and facilitate the adoption of its technology by other key players. In addition, the potential volumes with larger industry players offer significant growth potential.
According to the announcement, the agreements create opportunities to treat more than 100 million cuttings per year. With OptiCept's fee of SEK 0.25-0.40 per treatment, depending on volume, this could potentially translate into annual revenues of roughly 25-40 MSEK. However, given that the evaluation period is set to conclude around Q3’25 and that previously secured agreements in the cuttings sector are still generating small volumes, we consider this figure to be reasonable revenue in the medium to long term, depending on successful evaluations.
Our current estimates already include projected revenues of 50-60 MSEK from cuttings over the next three years. In view of this and the fact that the projects are currently only in the evaluation phase, we are not making any changes to our estimates at this time.
OptiCept Technologies
OptiCept Technologies förser livsmedels-och växtindustrin med teknologiska lösningar som används för att öka hållbarheten för diverse råvaror. Bolaget arbetar med biologiska processer som ger en ökad extraktion ur råvaran, minskat avfall samt bibehållen smak, doft, färg, näringsinnehåll. Bolaget har en patenterad teknologi inom PEF (pulsed electric field) och VI (Vacuum Infusion). Bolaget säljer sina produkter på en global nivå och har sitt huvudkontor i Lund.
Read more on company pageKey Estimate Figures04/06
2023 | 24e | 25e | |
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