RE:Seeing what you want to seetempletooth2 wrote:
I see some positive sentiment being expressed here re Scotia's comments. This appears to be based on a $3 target price, which in turn is based on a 2024 EV/EBITDA multiple of 23.
It isn't my intent to kick a stock when it's down. Heaven knows we all have losers in our portfolios. BUT.
Has this analyst been off-planet since November??? An EV/EBITDA multiple of 23?
For those of you who don't know, in the immortal words of Charlie Munger EBITDA is profit before expenses. I would also note that comparing Xebec to companies 100 times as large is questionable. Rather like comparing Grande Prairie, Alberta to Toronto in a discussion of urban problems.
For those who can only see about half the page of the Scotia report, it's worth pointing out some projections over the years 2023-24-25. Revenues are expected to grow from $240 million to $316.8 million to $400.7 million. After-tax income goes from a loss of $13.2 million, a loss of $5.8 million, to a profit of $6.5 million. Think on that for a moment. Here we have an industry that's going to save the planet but it's going to be a LOT LESS profitable than packing pork and beans into aluminum cans.
The same analyst at Scotia covers Anaergia. Over the same time frame, he sees Revenue of $465 million, $672 million and $885 million. Net income goes from $82.4 million, to $121 million, to $172 million. Much better than pork and beans!
It is true that we often see what we want to see....
We can also hope that the CEO executes his three-year strategic plan well, and takes advantage of the immense potential of Xebec.
It might be good to remember what this plan is all about:
Adding U.S. renewable natural gas manufacturing and sales base with a focus on small-scale agricultural applications, paired with a significant ramp up in annual Biostream production run rate (from 4 units in 2020 to over 100 units targeted in 2024).
Going global with hydrogen business supported by targeted industrial customers as demand from the hydrogen mobility sector ramps up, with a target of 20–25 decentralized hydrogen production hubs by 2024.
Expanding our PSA and compression technologies for Carbon Capture Utilization and Storage (“CCUS”) to reduce the carbon intensity of both our Cleantech Systems and to enter new markets in CO2 source capture and transportation.
Introducing XBC Flow Services as a unified brand to encompass the U.S. Cleantech Service Network, industrial product sales & distribution, and targeting CAD$150+ million in global segment revenues by 2024.
Building on strong partnerships in North America and China to support OEM growth and create long-term value.
Invest in new clean technologies to help drive new business models by the end of 2025 and beyond, with a target of 2-3% per year of revenues earmarked for R&D.
Financial goals of CAD$300–$350 million in revenues and adjusted EBITDA margin (non-IFRS) of 8-10% by 2024, representing up to a 40% revenue CAGR and an improvement in adjusted EBITDA margin (non-IFRS) from (7%) for our fiscal year ended December 31, 2021.