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@gspannner - feel free. I would rather useful information was posted across all forums to help people.
10s of million would be lovely but sadly as a young investor I did not have access to that kind of capital at the time. Let's hope a few others I have come good and then you never know, 10 million would be nice one day :)
The interesting aspect of the emerging model here is contract payments on possible projects are likely to be able to fund the company from this point on. Especially so given DP is now chasing smaller repeat deals rather than longer lead bespoke ones.
So it might be a while before there is any need to raise funds and if all goes swimmingly maybe it can be avoided.
The thing to remember is the management hold options on 600m shares at 0.25p exerciseable by the 31st March 2023. I don’t think PB wants to put any road blocks down on maximising his personal 194m options.
@LordGibil - I totally agree, I have been conservative on purpose. The key to investing well is conservative assumptions, if you value a company using a P/E of 100, and your valuation gets you a 300% return, there is a chance you can very easily get burnt (the bubble could burst etc.). If with extremely conservative assumptions, you land on a valuation with >300% upside, it certainly gives me some real conviction to buy. When I did the maths with EQTEC 8 months with the company worth £6m, I was a little shocked at where my valuation landed, and I did it again and again and got the same answer. All I will say is that personally, if we get to 3p, I still don't think I will be a seller. I will likely be buying more.
Thanks guys, appreciate it. It just annoys me seeing people who have clearly not done any research (I won't name names but there are a few), speaking absolute drivel.
Re a placing, if there is one (I personally highly doubt it), they may issue something like 20% of the current shares outstanding at a 15% discount. This means that in 3 years time the share price will likely be 2.5p instead of 3p, with no more projects signed. Who cares? Do people honestly believe that this technology is not the future? Governments are going to be forced to support it...I'm personally happy with that return, regardless of a placing or no placing. If you want to day trade and bet on one then so be it, but thats not for me. One point I would like to reiterate:
Design costs are 2-4% of Capex on financial close, EQTEC receive 25% of total revenue, which is 40% of Capex (25% * 40% = 10%).
This means BEFORE the build commences, EQTEC have made a 3-5x return on their investment. What a great business model.
EQTEC begin to receive revenue upon financial close of a project. They receive payments in 7 parts, totalling 30%-40% of the projects Capex, when certain milestones are hit. For small projects (0.5MW-2MW) these 7 revenue milestones are over 12 months, and for large projects these are over 3 years. So Billingham, when financially closed, will generate c. £50m-£60m over 3 years. EQTEC receive 25% of this £50m-£60m (£12.5m-£15m) UPFRONT, before any work actually takes place. This is the most important part. This payment should land this year, which makes EQTEC fully funded for the foreseeable.
North Fork is already financially closed, EQTEC are due a final payment of c. $700k Q4 2020 before the project is commissioned Q1 2021. EQTEC have a 20% stake in North Fork, and their project will be valued at $20m with annual revenues of $4m (EQTEC stake = $4m, EQTEC revenue $800k p.a.). Agrigas is also due to financially close this year, of which c. £2m of revenue is due to EQTEC over 12 months, with £500k coming at financial close H2 2020. We also have Biomasse in France, of which £5m of revenue is due over 15 months upon financial closure, c. 33% that should arrive in 2021. Same goes for NAPA in California, and Agrigas 2 in Greece.
Designing the projects costs between 2-4% of Capex. What was announced today was that there was a collaboration on projects where two were 25MW Size (same as Billingham). If financial close is achieved on these 2 projects, that is another £50m of revenues over 3 years per plant. This means it would cost EQTEC c. £6m-£10m to design these two projects. This should easily be covered by the money coming in from the projects already agreed above.
They have also said that they had a current non contractual pipeline fo £130m (I assume Capex) of projects. I think it's fair to say that 25% of this could become real (c. £40m of revenue for EQTEC, maybe 50% of that in 2021).
Considering EQTEC only had revenues of £1.9m in 2019, it looks like we are looking at > £10m in 2020, and on for £30-£40m in 2021. Add in the deal closed today, if both financially close that £30-£40m would be nearer £60m. From the research report, 38m in revenue produces c. £6m in profit. Using a very normal P/E ratio of 15, that implies a market cap of £90m, 3x where we are today. Personally, I think that represents fair value and where the share price should be and thats why I am not selling a single share, despite being in from 0.15p. If we close the projects announced today, we would probably be looking at a company worth £160m, >5x the current share price.
Every deal/project we sign from here is additive to this valuation, and that is why this is so exciting.