EQTEC provides engineering and design services and sells its EQTEC Gasifier Technology (EGT) to waste-to-energy operators and enterprise partners. The company works together with multiple parties involved in W2E projects including the developers, waste owners, building contractors and funders with a view to ultimately providing its gasification technology, associated engineering & design services and O&M services.
- Efficient and reliable technology with a strong track record
EQTEC has already proven the economic viability of its technology and seen many years of it operating in a commercial environment. Flagship project the Movialsa plant in Spain has seen over 90,000 hours of commercial operations since 2011.
- Large pipeline of opportunities provide near-term revenue potential
EQTEC currently has a large pipeline of projects across the UK, Europe and US, with total capex values ranging from €10 million to €100 million. An operations update in April confirmed that the company has recently seen a “significant increase” in the level of international interest in EGT. This follows the signing of an equipment purchase contract with US power company Phoenix Energy.
- Debt facilities provide funding for growth
EQTEC has two debt facilities in place. A Combined Secured Loan Facility with Altair Group has recently been increased by £0.879 million to £3.5 million. Additionally, the company has a $10 million secured facility with Cuart Investments Fund.
- Poitive waste and energy market drivers
EQTEC’s technology and services lie in a sweet spot, providing a solution to dealing with problems associated with two of the world’s most pressing issues - rising levels of waste (and how to manage it) and growing demand for energy. Research Nester forecasts that the global waste-to-energy will grow at a CAGR of 5.7% to 2024 to reach a value of $42.52 billion.
- Valuation suggests 171% upside with further long-term potential
Based on our forecasts and using a peer derived EV/EBITDA multiple we set an end 2020 target price for the shares of 2.293p. With this implying 171% upside, we initiate coverage of EQTEC with a stance of Conviction Buy.
Table: Financial Overview
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Year to Dec
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2019E
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2020E
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2021E
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Revenue (€m)
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|
13.8
|
74.85
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123.27
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Pre-tax (€m)
|
|
(0.2)
|
10.2
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18.8
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EPS (c)
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|
(0.01)
|
0.34
|
0.58
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Source: Align Research
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