Broker Daniel Stewart favours Energetix in the microCHP sector.
Daniel Stewart reckons that microCHP technologies are poised for significant deployment over the next few years. The global microCHP market was worth €500 million in 2011 and a number of technologies are entering commercial production. Energetix’s Organic Rankine Cycle-based (ORC) is due to be fully launched early in 2013.
Ceramic Fuel Cells is already selling its fuel cell-based BlueGen boiler. In contrast, Ceres Power, which has an agreement with British Gas, has delayed the launch of its boiler until 2016 and this is just the latest of a number of delays. Ceres requires more cash in order to still be around when the product finally reaches the market.
Energetix is changing its strategy and becoming an electricity supplier in order to provide its microCHP for free in return for customers signing a long-term supply agreement.
Daniel Stewart reckons that, at 20.5p a share, the current valuation of Energetix does not fully value the long-term potential. Securing a manufacturing partner, accreditation of the boiler for the UK Feed-in Tariff and further installation partners are just some of the potential catalysts for an improvement in the share price.
Energetix will eventually attract bidders if the strategy is seen to be working. Daniel Stewart forecasts a profit of £6 million in 2014, rising to nearly £20 million in 2015, which is more than the current market value.