Original-Research: Zefiro Methane Corp. (von GBC AG): BUY

Classification of GBC AG to Zefiro Methane Corp.

Company Name:	Zefiro Methane Corp.
ISIN:	CA98926D1069
Reason for the research:	Research Report (Update)
Recommendation:	BUY
Target price:	1.50 USD
Target price on sight of:	30.06.2027
Last rating change:
Analyst:	Cosmin Filker, Matthias Greiffenberger

Strong growth expected on the basis of an extensive pipeline

Zefiro Methane Corp. is a listed environmental services company with its operational focus in the USA. The company specialises in the identification, measurement and reduction of methane emissions from decommissioned and abandoned oil and gas wells. Its operational activities primarily comprise the decommissioning and remediation of wells, as well as complementary technical services. Furthermore, the company aims to tap into additional revenue potential through the marketing of carbon credits. The operational platform is provided by the subsidiary Plants & Goodwin (P&G), whose capabilities were recently expanded through the acquisition of equipment from Viking Well Service.

In the past FY 2025/26 (end of FY: 30 June), Zefiro Methane increased its revenue by 31.1% to USD 42.49 million (previous year: USD 32.41 million). The increase in revenue, which was predominantly organic, resulted in particular from the expansion of well-plugging activities. Significant contributions to revenue came from government-funded remediation projects in Ohio and Louisiana, as well as additional contracts from private-sector clients. However, revenue performance fell short of our previous expectations of USD 45.18 million. In the fourth quarter in particular, seasonal factors, as well as start-up and integration effects relating to the expansion of operational capacity, had an impact.

In parallel with the rise in revenue, Zefiro achieved a significant improvement in earnings. EBITDA, as calculated by us, rose to USD 0.60 million (previous year: USD -4.75 million), marking the achievement of an operational turnaround. In addition to higher utilisation of existing capacity, the cost-cutting measures implemented by the new management contributed to the improvement in earnings. The gross margin rose to 29.2 per cent (previous year: 23.0 per cent). EBIT improved to USD -2.75 million (previous year: USD -8.53 million), whilst the result after tax remained negative at USD -3.55 million (previous year: USD -10.76 million).

According to the company, our growth expectations are based on the largest contractually secured project pipeline in the company’s history. Of particular note is the three-year contract with the Ohio Department of Natural Resources, with a total value of USD 19.60 million, for the decommissioning of around 200 boreholes. Furthermore, in September 2026, a further government-funded contract worth USD 11.50 million was secured. Additional growth potential stems from the partnership with the Well Done Foundation, which initially involves the decommissioning of ten boreholes and could be expanded to around 70 boreholes in the future.

In addition to the implementation of these projects, we expect further growth momentum from the increasing utilisation of the Viking capacities acquired in May 2026. According to the company, the five additional service rigs will increase annual revenue capacity by around USD 10 million. The expansion of the private client business and geographical expansion should also support further business development. In the medium term, the resumption of the carbon credit business could also generate additional revenue.

Against this backdrop, we confirm our previous revenue forecasts and expect revenue to rise to USD 57.92 million for the current financial year 2026/27, with EBITDA of USD 10.02 million. For the financial years 2027/28 and 2028/29, we forecast revenue of USD 66.85 million and USD 75.21 million respectively. Owing to an expected improvement in capacity utilisation and a more favourable cost structure, we anticipate a disproportionately high increase in earnings. By the 2028/29 financial year, EBITDA is expected to rise to USD 15.04 million and the EBITDA margin to 20.0 per cent.

Based on our updated DCF valuation model, we confirm our previous price target of USD 1.50 per share (CAD 2.15). In view of the resulting high upside potential, we maintain our BUY rating.

You can download the research here: 20261013_Zefiro_Update_engl

Contact for questions:
GBC AG
Halderstrasse 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Disclosure of potential conflicts of interest pursuant to Section 85 of the German Securities Trading Act (WpHG) and Article 20 of the Market Abuse Regulation (MAR) The following potential conflict of interest exists in relation to the company analysed above: (5a,11); A list of potential conflicts of interest can be found at: https://www.gbc-ag.de/de/Offenlegung

Note on issuer-sponsored research: This research report is issuer-sponsored research and has been prepared in accordance with the EU Code of Conduct for issuer-sponsored research.
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Completion: 12/10/2026 (4:15 pm)
First distribution: 13/10/2026 (10:30 am)