RE:Analyst report from M Partners, 2nd Analyst Covering XBC
In a research report to clients today, Hood initiated coverage of Xebec with a Buy rating and a one-year price target of $2.20, implying a return of 71 per cent at the time of publication. Hood says that after several years of false starts, Xebec now has clear momentum. Xebec is a leading cleantech provider in the early stages for renewable natural gas, the analyst notes. XBC systems provide the most reliable, low-cost performance for upgrading biogas to pipelinequality RNG. With the premium cost of RNG acting as a barrier to acceptance by utility regulators, lower-cost systems enjoy a competitive advantage. Xebec is gaining traction, increasing order backlog from $16.7M to $71.4M over the past year. The says Xebec is essentially facilitating mandated demand. Government support for GHG reduction globally supports investments in RNG infrastructure, with many policies mandating minimum biomethane content, he adds. RNG presents the simplest, most reliable solution, with 95% reduction in carbon emissions vs. fossil natural gas, and the flexibility to inject directly into the existing grid. For countries to meet emissions reduction goals, they must invest over the next few years. The market for equipment sales is over $6B in Xebecs target markets (France, Italy, United States and Canada) for roughly 1,700 potential projects. Investments are already underway, with a $51M order from Sapio in Italy and a $5.5M contract from Enbridge in Toronto over the past year. In the U.S., the opportunity lies in 120-160 landfill sites, at $15-25M for a biogas upgrading