Shares in AIM-listed gasification solutions specialist EQTEC have been on the slide since the turn of the year, having soared in value in the last few weeks in 2020. A significant placing was completed in late May, with £15m before expenses raised through the issue of new shares at 1.5p each. With increasing demand for sustainable investment alternatives, the opportunity to buy in at the current level looks very tempting.
EQTEC is a gasification technology and engineering company which has built a track record of delivering operational and commercial success for transforming waste-to-energy. It has proprietary and patented technology, which is at the centre of clean energy projects. The company designs, supplies and builds advanced gasification facilities in the UK, EU and the US, using highly efficient equipment that is modular and scalable from 1MW to 30MW. The solutions process over 50 varieties of feedstock which includes forestry wood waste, vegetation and other agricultural waste from farmers, industrial waste and sludge from factories and municipal waste. There are no hazardous or toxic emissions and the solutions produce a pure, high-quality gas that can be used for applications including the generation of electricity and heat, production of synthetic natural gas or biofuels and reforming of hydrogen.
On 21 June the company announced that the binding legal documentation for financial close of the acquisition and planned recommissioning of the 1MWe EQTEC Italia Market Development Centre plant had been signed. A consortium of co-investors, also including an Irish Family Office, an Italian Family Office and MetalNRG plc had recently formalised the intention to recommission the 1 MWe biomass-to-energy plant in Tuscany, Italy. EQTEC Italia MDC will transform straw and forestry wood waste sustainably sourced from local farms and forests into green electricity and heat for the local community. This will be the first of the company’s Market Development Centres, which will demonstrate EQTEC’s technology in a fully operational, commercial setting.
Final results for the year ended 31 December 2020 were released in April. Revenue was €2.23m versus €1.69m in 2019. A loss before taxation of €5.84m was incurred versus a loss of €3.58m in the prior year. In 2021 current and new projects, alongside gradual growth from maintenance and consulting contracts, are forecast to generate revenues of approximately €15m. These revenues, combined with an expected contribution from EQTEC Capital, are expected to generate positive EBITDA and this would lead to 2021 being EQTEC’s first year of profitability.
There could be exciting times ahead for investors although it should be noted that the shares are likely to be volatile given historic movements and the nature of the business. However, EQTEC is at a very interesting stage in its development and there is scope for considerable upside for those buying in now. For this share tip, we put forward a SPECULATIVE BUY recommendation.
