EQTEC – For lovers of ‘penny shares’ this really is a sustainable proposition

3 mins. to read
EQTEC – For lovers of ‘penny shares’ this really is a sustainable proposition

With its proven proprietary patented technology for cost-effective and sustainable waste-to-value applications, EQTEC is a world leading gasification technology partner.

David Palumbo, the Chief Executive Officer of EQTEC (LON:EQT), considers that his group’s mission is to provide sustainable technological solutions to address two of the world’s greatest challenges – managing rising levels of waste and meeting the growing demand for clean energy.

He states that EQTEC’s business model involves sourcing and providing assistance in developing waste elimination projects which will convert waste into clean energy.

Green for go?

The group is the proud recipient from the London Stock Exchange of the Green Economy Mark, which recognises listed companies deriving 50% or more of their revenues from environmental solutions.

With its proven proprietary patented technology for cost-effective and sustainable waste-to-value applications, the company is a world leading gasification technology partner.

Real energy

It designs and supplies advanced solutions that produce a higher efficiency offering, that is both modular and scalable from 1 megawatt to 25 megawatts. (A megawatt is a unit of power equivalent to 1m watts, enough to power supply around 650 average homes.)

The group collaborates with waste operators, developers, technologists, engineering procurement and construction contractors, and capital providers to build sustainable waste elimination and green energy infrastructure. 

Gassy knowhow

Revenue is driven from licensing and selling its technology, supplying gasification reactors and equipment, and engineering and design services using its unique expertise. 

Its technology is so versatile that it can process over 50 different types of feedstock, such as agricultural waste, biomass, municipal waste and even plastics.

Its solutions produce a uniquely pure high-quality synthesis gas, capable of being used in the generation of energy, biofuels and hydrogen. 

This advanced gasification can then be used in three main areas – clean fuels, industrial energy transition and waste-to-energy projects.

Growing demand

There is an increasing drive globally for better air quality, for renewables in energy and the decarbonisation of industrial processes. These each are high growth markets to which EQTEC will become a major supplier.

To date, four commercial plants have been built and are using the group’s advanced gasification technology. The oldest such plant, built in 2011, has operated for over 125,000 independently audited engine hours. 

Improving without harm or toxicity

Significantly, its solutions improve both the economic and environmental impact of many waste-to-energy projects, with no harmful or toxic emissions.

Towards the end of last month, the group announced the planning approval of a revised scheme for a 25MW waste gasification and power plant at Billingham.

Milestone project

This project, on behalf of a European owner operator of waste-to-energy infrastructure, is planning to convert each year some 200,000 tonnes of non-recyclable household and commercial waste into 25MW of green electricity and 34MW of thermal heat production. 

That waste would otherwise go into landfill or through incineration.

David Palumbo stated that he was delighted to start 2021 with the achievement of a significant milestone for both the project and for his company.

Market buzz drove price higher

Rumblings about the potential benefits from this project might well have helped to spur the shares from a lowly 0.55p in late November up to a 3.16p high a couple of weeks ago.

They have since eased back to trade around 2.2p, at which level I find them very appealing. 

From its roots in project development in Ireland and engineering excellence in Spain, the company is now poised to ride a rising market and to deliver much needed infrastructure for waste elimination and green energy production.

Billions of shares

There are 7.03bn shares in issue.

The larger holders of which include Altair Group Investments (19.6%), TB Amati Investment Funds (6.6%), Janus Henderson Group (4.7%), and Premier Miton Group (3.9%).

Broker impressed

Analyst Nick Walker at Arden Partners, rates the shares as a ‘buy’.

For the year to end-December 2020 he estimates that sales revenues were up from €1.7m to €2.4m, generating a smaller pre-tax loss of €2.3m against €3.7m previously.

That might look scary to you – however, the following might attract you to the company and its potential.

For the current year Arden is going for sales to leap over 20 times to €48.1m, then next year almost doubling to €80.6m, producing pre-tax profits of €7.4m then €13.8m respectively.

Now that really is an impressive leap forward and why I rate the shares of this penny stock as being capable of rising significantly.

My view

Until further news is known or declared I put the shares out on a target price of just 3p, which offers 36% upside and could well be achieved in a very short timeframe.

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