Align Research - EQTEC - Initiation of Coverage. Conviction Buy
Paul Kettle
Align Research Note -3 min read
09:57, 18th April 2019

 

 

 

 

 

 

 

EQTEC - Initiation of Coverage

 


Well positioned both financially and operationally to grow substantially in the waste-to-energy market

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

Year to Dec

 

2019E

2020E

2021E

Revenue (€m)

 

13.8

74.85

123.27

Pre-tax (€m)

 

(0.2)

10.2

18.8

EPS (c)

 

(0.01)

0.34

0.58

Source: Align Research

 

CONVICTION BUY - Price target 2.293p

 

Key data

Share price

0.845p

52 week high/low

1.73p/0.315p

Exchange

AIM

EPIC

EQT

Shares in issue

1,967,771,381

Market Cap

£16.63m

Sector

Alternative Energy

IMPORTANT: EQTEC is a research client of Align Research. Align Research owns shares in EQTEC. For full disclaimer information please refer to the last page of the full document.

Click to Download Full Report

 

 

T.+44 (0)203 609 0910
E. info@alignresearch.co.uk

Align Research, 7 Moorhead Lane, Shipley, BD18 4JH

www.alignresearch.co.uk

This is a marketing communication and cannot be considered independent research. Nothing in this report should be construed as advice, an offer, or the solicitation of an offer to buy or sell securities by us. As we have no knowledge of your individual situation and circumstances the investment(s) covered may not be suitable for you. You should not make any investment decision without consulting a fully qualified financial advisor.

Your capital is at risk by investing in securities and the income from them may fluctuate. Past performance is not necessarily a guide to future performance and forecasts are not a reliable indicator of future results. The marketability of some of the companies we cover is limited and you may have difficulty buying or selling in volume. Additionally, given the smaller capitalisation bias of our coverage, the companies we cover should be considered as high risk.

This financial promotion has been approved by Align Research Limited. Align Research has made every reasonable effort to ensure the accuracy of the information in our research reports although this cannot be guaranteed. Align Research is authorised & regulated by the Financial Conduct Authority. FRN No - 768993.

 

 

 

 

 

EQTEC - Initiation of Coverage

 


Well positioned both financially and operationally to grow substantially in the waste-to-energy market

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

Year to Dec

 

2019E

2020E

2021E

Revenue (€m)

 

13.8

74.85

123.27

Pre-tax (€m)

 

(0.2)

10.2

18.8

EPS (c)

 

(0.01)

0.34

0.58

Source: Align Research

 

CONVICTION BUY - Price target 2.293p

 

Key data

Share price

0.845p

52 week high/low

1.73p/0.315p

Exchange

AIM

EPIC

EQT

Shares in issue

1,967,771,381

Market Cap

£16.63m

Sector

Alternative Energy

IMPORTANT: EQTEC is a research client of Align Research. Align Research owns shares in EQTEC. For full disclaimer information please refer to the last page of the full document.

Click to Download Full Report

 

 

T.+44 (0)203 609 0910
E. info@alignresearch.co.uk

Align Research, 7 Moorhead Lane, Shipley, BD18 4JH

www.alignresearch.co.uk

This is a marketing communication and cannot be considered independent research. Nothing in this report should be construed as advice, an offer, or the solicitation of an offer to buy or sell securities by us. As we have no knowledge of your individual situation and circumstances the investment(s) covered may not be suitable for you. You should not make any investment decision without consulting a fully qualified financial advisor.

Your capital is at risk by investing in securities and the income from them may fluctuate. Past performance is not necessarily a guide to future performance and forecasts are not a reliable indicator of future results. The marketability of some of the companies we cover is limited and you may have difficulty buying or selling in volume. Additionally, given the smaller capitalisation bias of our coverage, the companies we cover should be considered as high risk.

This financial promotion has been approved by Align Research Limited. Align Research has made every reasonable effort to ensure the accuracy of the information in our research reports although this cannot be guaranteed. Align Research is authorised & regulated by the Financial Conduct Authority. FRN No - 768993.

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