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Northland Capital Partners View on the City - Active Energy Group & Starcom.

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ACTIVE ENERGY GROUP (LON:AEG)

SECTOR – RENEWABLE ENERGY

RATING – CORP*

MARKET CAP – £9.3m

CURRENT PRICE – 0.9p#

ANALYST – MIKE JEREMY

 

Year-end Dec

2016A

2017A

 

 

 

Revenue (US$m) (excludes discontinued operations)

-

-

No forecasts provided

EBITDA (adj) (US$m)

(0.52)

0.58

Rptd. Net Loss (US$m)

(2.49)

(15.22)

EPS (US$c)

(0.38)

(1.78)

DPS ($c)

-

-

Net Cash/(Debt) (US$m)

(5.52)

(13.08)

P/E (x)

-

-

Dividend yield (%)

-

-

EV/EBITDA (x)

-

-

 

SOURCE: Northland Capital Partners Limited estimates. #Priced at prior trading day close. *Northland Capital Partners Limited Acts as Nomad to Active Energy Group and therefore this information should be viewed as a Marketing Communication.

 

Operations update – site purchase evaluation in North Carolina

 

NORTHLAND VIEW

  • North Carolina: To facilitate installation of a 5-tonne/hour Coalswitch™ plant, Active Energy has signed a letter of intent with Alamac Holdings LLC for a site in Lumberton comprising c. 415,000 sq ft of factory space with a steam pipeline to Georgia Renewable Power, and c.145 acres of adjacent land.  Due diligence will be conducted to 28 February with the aim of purchase completion.   It is discussing support for plant installation with engineering specialist Andritz Group.
  • Newfoundland:  Following the grant of Commercial Timber Permits AEG is now developing an operational plan focused on near-term commercialisation.
  • International:  AEG reports received “multiple expressions of interest” from potential partners in Asia for evaluation of CoalSwitch™ technology and installation, although there are no formal contracts as yet.
  • Poland:  AEG reports that its application for EU grant funding to the Polish National Centre for Research and Development in Poland for its SuperFuel™ technology is pending, with a possible decision in Q119.
  • PeatSwitch™: AEG reports that a review by Young Living Farms MOU has not led to a contract. It is working with Kellogg Garden Products on technical issues, whilst there is interest from other parties.  
  • Alberta:  AEG reports financial due diligence for funding its proposed Powerwood Canada jv.

Updating on all activities, it is the progress in North Carolina which, at this stage, should be most material.

 

COMPANY DESCRIPTION

Active Energy Group (AEG) is an international, vertically-integrated forestry management and renewable resource energy provider.  The group combines management of forestry resources with the commercial development of a proprietary solution (CoalSwitch™) to the integration of wood-based (biomass) fuel into existing coal-fired thermal power plants. 

 

STARCOM (LON:STAR)

SECTOR – TECHNOLOGY

RATING – CORP*

MARKET CAP – £4.5m

CURRENT PRICE – 1.5p#

TARGET PRICE – 3.7p

ANALYST – MIKE JEREMY

 

Year-end Dec

2016A

2017A

2018E

2019E

 

Revenue (US$m)

5.131

5.440

5.901

6.276

Adj. EBITDA (US$m)

(0.783)

(0.193)

0.485

0.622

Adj. Pre-tax Profit (US$m)

(1.426)

(1.164)

(0.162)

(0.207)

Adj. EPS (US$c)

(1.138)

(0.622)

(0.052)

(0.062)

DPS (US$c)

-

-

-

-

Net Cash / (Debt) (US$m)

(0.92)

(0.57)

(0.05)

(0.14)

P/E (x)

N.M

N.M

N.M

N.M

Dividend yield (%)

N.M

N.M

N.M

N.M

EV/EBITDA (x)

N.M.

N.M.

11.9

9.3

 

SOURCE: Northland Capital Partners Limited estimates. #Priced at prior trading day close. *Northland Capital Partners Limited acts as Nomad and Broker to Starcom Plc and therefore this information should be viewed as a Marketing Communication.

 

Trading update – delay in N. Africa payment, FY18 EBITDA break-even

 

NORTHLAND VIEW

  • Starcom reports a delay in payment from the government department responsible for its North African order for Helios Advanced units - announced on 7 November - with the result that this is now expected by the end of January rather than, as expected, by year-end FY18.  As a result, although the software component of the order, worth c.US$0.2m, is expected to be recognised in FY18 reported earnings, the hardware component, comprising the balance of the US$1.1m order, is expected in H119.
  • Despite this, Starcom expects FY18 revenues to “slightly exceed market expectations”.  However, “EBITDA is now expected to be approximately breakeven (subject to final audit)”.  Overall, the company reports that “other business is progressing well, and the Company expects continued growth in 2019”. 
  • Starcom also reports that the due diligence process with the replacement Nominated Adviser is progressing and expects to make an announcement before 1 February.

Starcom stresses that payment for its N. African Helios order is a matter of delays in processing, with a clear impact on FY18 earnings but a carry into H119.  The company has reiterated the continued prospect of revenue growth this year.

COMPANY DESCRIPTION

Starcom Group develops and manufactures technology using cellular and GPS systems designed for tracking vehicle fleets, equipment, people, containers and merchandise.

 

 

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