Dalrada: Revenue acceleration gaining pace
Dalrada is a global company that holds a portfolio of subsidiaries comprising early-stage high growth businesses within three verticals – healthcare, clean energy, and information technology. The shares have gained 212% over the last three months, reflecting positive news flow in all three segments.
The company ended FY June 2021 strongly with revenues of US$3.4mln representing growth of +189% versus 2020 (results release October 14). This was driven in particular by the information technology business Prakat and strong performances in three of the healthcare businesses – GlanHealth (sanitizing products, Rejuvenation therapies), IHG certified nurse training, and Precision Engineering.
Dalrada has also reported a strong start to FY June 2022, with revenues for the quarter ended September 30 surpassing the past eight quarters’ combined gross revenues at $4.6mln. This includes new revenues for on-site COVID-19 testing services, and revenues from IHG, Prakat, and GlanHealth.
During the remainder of FY 2022 we expect continued strong activity from the healthcare businesses, including a significant revenue contribution from the potential acquisition of Advanced Healthcare. The LOI for this acquisition was announced on October 26 and has a revenue run-rate of US$10mln per year. The company plans to complete its due diligence and the acquisition before December 15.
Furthermore, we expect an increasing contribution from the Likido Green Energy business, which began generating revenues in FY 2021. We understand that the company will have three new units installed and operational with customers during the current quarter. The company further strengthened its capability within the clean energy space with the formation of its clean energy advisory board, with former US Secretary of the Interior, Ryan Zinke, becoming the first board member. We continue to view Likido as the biggest value driver for Dalrada over the next two years, and we include a reminder of the product offering on p2.
Acceleration of growth, strong FY 2022 outlook
The very strong recent share price performance reflects revenue acceleration, and increased visibility around the growth outlook for all three verticals – information technology, healthcare, and clean energy.
We are raising our revenue forecast for FY June 2022 from US$20mln to US$25mln, and we continue to expect the company to exceed break-even EBITDA for the year. In the medium term (two-four years) we believe that Dalrada is capable of exceeding US$100mln per year of revenue at strong profit margins, and we believe that this would justify significant upside to the current share price, even after recent gains.
Catalysts and upside
Year end Jun 30 · 2020 · 2021 · 2022
Revenue (US$M) · 1.2 · 3.4 · 25.0
Gross Profit (US$M) · 0.6 · 0.9 · 13.5
EBITDA (£M) · (2.6) · (8.4) · 2.4
Likido Energy is an engineering technologies company with a range of clean energy efficiency products which offer transformational energy savings for a range of industrial, commercial and domestic applications. The core technology is an innovative proprietary design of heat pump.
Likido’s flagship product is the LikidoONE high-temperature heat pump, which delivers efficient heat transfer using supercritical CO2 as its working fluid. Compared with conventional heat pumps which use hydrochlorofluorocarbons (HCFCs) as their working fluid, the use of supercritical CO2 allows a bigger heat step-down; a hotter hot circuit and colder cold circuit. By using CO2 LikidoONE opens up new markets which are not addressable with conventional heat pumps, where the LikidoONE operates between temperatures of -40C to 140C.
The following illustration shows a LikidoONE unit.
Likido Energy
LikidoONE
Source: Dalrada image
Markets for the Likido technology include:
- Domestic heating
- Industrial - boiler heat recovery, chilling, drying, distillation and other processes
- Datacentres - cooling systems and heat recycling
- Food industry – hot water, drying, chilling, greenhouse climate control
- Pharmaceutical and chemical – Separation processes, distillation, heat recovery, product storage
- Hotel/Spa – Hot water for rooms, laundry, swimming pools. Cold air for air conditioning
- Vaccine storage – Cryogenic chilling
We believe that the Likido technology offers revolutionary energy savings across a wide range of users groups, and represents a transformational revenue opportunity for Dalrada Corporation.
Forecasts
Income Statement
Source: Proactive Research
Balance Sheet
Source: Proactive Research
Cash Flow
Source: Proactive Research