Eneraqua Technologies – Heating Up Efficiently

4 mins. to read
Eneraqua Technologies – Heating Up Efficiently

Now could well be the right time to be picking up some cheap stock in Eneraqua Technologies (LON:ETP), because its shares fell back from 50p to the current 41.45p after its AGM Statement last Wednesday.

The group is a specialist provider of energy and water efficiency solutions using its own patented, proven technologies.

It is taking advantage of the international need to reach net zero and address water scarcity, which is now driving its growth.

The Business

The £13.6m capitalised company is a UK-based specialist in energy and water efficiency.

The business is one of the largest installers of low-carbon heating systems in the UK.

It designs and delivers energy and water efficient systems that reduce its clients’ carbon emissions and water consumption thereby helping them meet their sustainability goals.

The company, which operates in two markets: energy, and water, is focused on clients with end-of-life gas, oil or electric heating and hot water systems.

It provides turnkey retrofit district or communal heating systems based either on high-efficiency gas or ground/air source heat pump solutions that support net-zero and decarbonisation goals.

The company, which operates in the UK, Netherlands, Spain and India, provides a service focused on water efficiency upgrades for utilities and commercial clients, including hotels and care homes.

Patented Technology

The group supports its clients helping to meet their net zero and sustainability goals through its own patented technology and expertise.

Its technology has Patent registrations in 31 countries.

ETP’s Control Flow HL2024 family of products reduces water wastage and improves the performance of heating and hot water systems. 

AGM Statement – 3rd July

Chairman Guy Stenhouse stated that:

“The Group has had a busy start to the new financial year.

In the UK our domestic energy projects are performing as expected.

The Group has also secured and commenced work on several multi-year commercial energy framework contracts.

Under these contracts, the Group is the appointed energy services partner for all public sector non-domestic building upgrades in those areas for the period to 2028.

Water continues to perform well with an increasing number of water and nutrient neutrality projects secured.

These types of projects are essential in unlocking development in the 74 local authority areas so far affected by these issues in the UK.  

Following the election in India, we are now progressing the next stage of projects to further demonstrate the benefits of our technologies in municipal housing applications. 

This is being done in partnership with the relevant State Authorities and The Environmental and Resources Institute (TERI).

As is often the case on these occasions the calling of a General Election in the UK for 4th July has had the effect of slowing decisions by certain customers as a result of the usual Government hiatus on funding and decision making during the election period. 

This will result in the deferral of some revenue into H2 FY25. 

However, we continue to expect a high level of activity, supported by a healthy balance sheet and a return to profit in H2 and for the full year as planned.”

Looking Ahead

Demand for Eneraqua’s solutions remains strong and the group is on course to meet FY25 targets.

The company reports good growth opportunities in Holland, Spain and India.

However, it does advise investors to not anticipate activity with UK domestic energy projects returning to normal levels until FY26.

The Management is now looking to give greater focus on non-domestic Energy projects where growth is expected, while anticipating a normalisation of the legislative environment in the UK to gives it confidence in further growth in Water.

But it still looks forward to a return to profit in H2 FY25 with a revenue growth trajectory.

The Equity

There are some 33.22m shares in issue.

Larger holders include Mitesh Dhanak (18.47%), Dave Routledge (11.21%), Ian McLeod (11.11%), Drew Johnson (9.41%), James Waring (7.48%), Raymond James Financial (5.62%), Gary Copeland (5.04%), Slater Investments (4.41%), Hayley Peters (2.76%), and Amati Global Investors (2.02%).

Broker’s View

Analyst Greg Poulton at Singer Capital Markets rates the group’s shares as a Buy, looking for 67p as his Price Objective.

He commented that Eneraqua’s AGM Statement confirmed a busy start to FY25.

A hiatus around the General Election had caused a deferral of certain contract awards into H2.

However, whilst this will lead to a greater H2 weighting, good visibility of contract awards in H2 leads management to reiterate guidance.

Our revenue forecast is 100% covered by orders and a return to profit is still expected in H2 and for FY25.”

For the current year to end January 2025 he estimates revenues to rise strongly to £85.0m (£53.8m), with a recovery to adjusted pre-tax profits of £2.4m (£6.0m loss), swinging earnings up to 5.3p (13.1p loss) per share.

For the year to end January 2026 he sees £93.5m revenues, £3.8m profits and earnings of 8.5p per share.

The average Price Objective of analysts following the company is 73.5p.

My View

A year ago, this group’s shares were trading at 145p, they have since fallen back quite substantially to the current 41p.

I now suggest that investors should take advantage now of the price having been slashed since the AGM Statement that was announced a week or so ago.

My Target Price for the shares is an easy 52p.

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