EQTEC - Operations & Valuation Update

Forecasts update following record project pipeline. EBITDA profits expected this year with further growth beyond

EQTEC provides engineering and design services and sells its EQTEC Advanced Gasification Technology to waste-to-value operators and enterprise partners. Its solutions are proven to process a wide variety of feedstock, including municipal waste, agricultural waste, biomass and plastics, with no hazardous waste or toxic emissions. EQTEC’s solutions produce a pure high-quality synthesis gas (syngas), capable of being used for the widest applications in the creation of energy, hydrogen and biofuels The company works together with multiple parties involved in projects including developers, waste owners, building contractors and funders with a view to ultimately providing its advanced gasification technology, associated engineering & design services and O&M services.

  • March trading update confirms growth of commercial opportunities

    EQTEC has experienced considerable growth in its non-contracted project pipeline since September 2020. The number of opportunities has grown from 41 to 75, up 83% over six months. Additionally, between July 2020 and February 2021, non-contracted tender opportunities worth a total potential of €316 million were added for a total potential pipeline value of €657 million.

  • Maiden EBITDA profits expected this year with further growth in 2022/23

    For 2021 EQTEC is targeting considerable, contracted sales growth from 6 – 8 projects across Europe, including new technology collaborations. This includes the RDF plant at Billingham in the UK, the company’s largest project, valued at over €30 million in sales to EQTEC over the construction phase of the project. Revenues for 2021 from existing, inflight projects, from new projects and from gradual growth in maintenance and consulting contracts, are forecast to drive positive annual EBITDA for the first time. Further growth is forecast for 2022 and 2023 based on the breadth and variety of deals in the pipeline.

  • Forecasts revised to consider enlarged pipeline and project delays

    Given the increase in the pipeline, offset by certain project delays, we have revised our forecasts. While our 2021 numbers have been revised down, our 2022 EBITDA expectations are broadly similar, edging up by €0.1 million to €10.9 million. We introduce 2023 forecasts, expecting the substantial non-contracted pipeline to translate into commercial success, with revenues more than doubling to €118.5 million and EBITDA growing by 116% to €23.5 million.

  • Blended EV/EBITDA & peer valuation suggests upside of 43%

    For our target price we choose a blended valuation comprising of 50% of our EV/EBITDA valuation and 50% of our peer comparable valuation. This gives a figure of 3.115p per share. We therefore update coverage of EQTEC with a target price of 3.115p and a stance of Conviction Buy.

  • RISK WARNING & DISCLAIMER

    EQTEC is a research client of Align Research. Align Research own shares in EQTEC. Full details of our Company & Personal Account Dealing Policy can be found on our website http://www.alignresearch.co.uk/legal/

  • For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.

Table: financial overview
Year to Dec 2020E 2021E 2022E 2023E
Revenues (€m) 2.4 15.5 55.64 118.5
EBITDA (€m) (3.8) 3.46 10.93 23.5
EPS (c) (0.043) 0.048 0.117 0.251
Source: Align Research

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