RE: What are we waiting for?9 Nov 2021 09:42
IP - Fossil fuels are not en vogue, Igas have significant non current liabilities which may be linked to legacy fracking plans, they also appear to have the structure and therefore overhead of a company with a much larger cap. On the flip side, it feels like their core business are at the point of turning a decent profit, partly through cost reduction but also driven by the gas/oil price. I would value their core business alone at significantly more than the current market cap, but pessimism around the industry is surpressing the value and there is risk around where prices restabilise.
If grey Hydrogen production materialises successfully gas production may be back in fashion. Igas have also credible diversification plans for deep geothermal and solar. The former leveraging their drilling expertise and the latter making use of land assets which I assume will, at the very least, offset non current liabilities. I often wonder what a new startup with no legacy issues would be valued at with similar plans to Igas in Hydrogen, Solar and Deep geothermal with credible partnerships and would question whether they are priced into the current cap.
In terms of what we are waiting for - I am waiting for an update showing revenue to be pushing £40m, a healthy ebitda, an indication of juicy financials around diversification plans and evidence of real on the ground progress for the same. SP movement continues to challenge my confidence, but until I hear anything that changes my view around the fundamentals, I consider it to be undervalued and will be holding firm. Hope for both/all our sakes that I am right.
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