- Major buying opportunity; recent pull-back in share price as a result of Q2 sales numbers coming under expectations, mainly due to a temporary disruption in the supply chain (now remedied), offers a unique entry point for those looking for exceptional upside share price revaluation potential.
- Targets for valuation of dynaCERT Inc. surrounding its HG-1 units alone, assuming only nominal adoption of the technology point to significantly higher share price for DYA.V; analyst Jay Taylor of Hard Money Advisors Inc. currently maintains coverage on dynaCERT Inc. with a 'Buy' recommendation and near-term (12 month) price target of US$2 to $2.50/share (~$2.60 to $3.30 Canadian).
- Technology that reduces greenhouse gases 40% and increases fuel-savings 19.2%.
dynaCERT Inc. (TSX-V: DYA) (OTC: DYFSF) proprietary HG-1 unit, targeting diesel burning class 6 - 8 engines of transport trucks, is nothing short of revolutionary; the CERT in dynaCERT stands for “Combustion Emission Reduction Technology” -- the technology increases fuel-savings up to 19.2%, reduces greenhouse gases up to 40%, reduces particulate matter ~65%, creates a cleaner burn (significantly reducing carbon fouling), reduces diesel emission fluid use by ~30%, increases torque, and extends engine oil life. The new HG-1 unit with built-in smart-ECU was launched entering 2017 and by May the Company was producing HG-1 units at a rate nearing ~50 per day. The smart-ECU interfaces with the trucks diesel engine computer and regulates the injection on-demand of pure elemental hydrogen and oxygen (produced by the HG-1 unit). This publication has had reports of some very significant names (Loblaw, The Beer Store, IFS Logistics Freight Systems) that are now using dynaCERT’s HG-1 technology, mostly on a pilot-basis, and the reviews circulating within the industry from users are universally spectacular. This new technology is now percolating in a major way within the transportation sector, which appears only at the beginning of a massive adoption curve; it is only a matter of time that these initial pilots/sales translate into strong expansion across entire fleets. A number of potential catalysts are lining up that could see the share price of dynaCERT propel vertically from here.
The Company’s marketing and business council is just getting organized now; in June the former President of Cummins Diesel Canada joined, and the former President & CEO of MEGA Brands joined. The connections and pull within the industry these two individuals alone have are impressive and shareholders can look forward to the diligent and disciplined marketing effort they offer to bring to the table for dynaCERT’s management and leadership to act upon. Look for Company accomplishments, awards, and testimonials of satisfied clients to be leveraged. Look for dynaCERT to get engaged in the trucking industry by becoming part of the fabric of associations, conventions, and magazines. Look for a possible customer visits program whereby prospective clients can be guided through and conclude they would be remiss in not making the investment. Look for the possibility of dealer participation as the HG units are ancillary, non-competitive, and add value to the product offering.
The size of the potential market is enormous. In North America current truck manufacturing production is at ~220,000 class A trucks alone per annum, these trucks stay in North America for ~8 years, and there are millions of aftermarket trucks on the road that could save 15%+ on fuel and emit 40% less. Then there is the smaller pick-up and delivery market. The potential is global, in June dynaCERT announced it has signed multiple dealership agreements in Europe.
image: https://www.stockhouse.com/getattachment/4dffb593-af2a-41d3-8df9-5150b51275e6/fred-1.jpg
CORPORATE SOCIAL RESPONSIBILITY: Ignoring the fact dynaCERT's HG-1 unit saves a client company money via dramatically reduced fuel costs and maintenance, the corporate social responsibility a company demonstrates by meaningfully reducing harmful emissions is priceless from a PR standpoint. Entities such as Loblaw have already began initial purchases, however that is only the beginning in this nascent market. Entities such as Walmart (which would seem like a likely candidate) has a goal of reducing Scope 1 and Scope 2 emissions by up to 18 percent by 2025 and recently announced its 'Project Gigaton' to remove a gigaton of carbon from its supply chain.
SOLID MARGINS FOR COMPANY TO GROW WITH: dynaCERT is expecting in excess of US$100 million sales for the first 12 months (following initial ramp-up at its new production facilities) at ~60% gross profit, and the Company has new products and markets coming online. Each HG-1 unit sale results in ~US$6,700 to dynaCERT and nets the Company ~US$4,000 in gross margin cash flow, which the Company can use to help fuel its rampant growth. The Company has not yet given targets for 2018, however we do know the Company is targeting a near-term 6,000 HG-1 units per month run rate -- NOTE: 6,000 HG-1 units per month sales would generate ~US$40,000,000 in sales per month and DYA.V would be at 2/3 gross profit margins.
New Product -- HG-2 (refrigeration container market): In the March 28, 2017 press release entitled "
dynaCERT Announces $2.7 Million in Sales, New Product Developments and Results of 2017 Annual Meeting of Shareholders" the CEO stated the Company was introducing a new HydraGen
TM unit; the HG-2 (HG-1 would be for trucking market) targeting the refer (refrigeration) units of transport trailers. This HG-2 market is 3.5 times larger than the trucking market and is expected to begin commercialization in Q3-2017. Each refer unit has a 4 cylinder diesel engine inside them that runs 24/7 to produce the refrigeration -- the market is huge. The unit conceivably can be expanded to service class 6 & 7 trucks, buses and smaller trucks commonly found outside of North America, such as in European countries and in India.
image: https://www.stockhouse.com/getattachment/20f3d375-fd64-4867-8eba-010d625c583a/fred-2.jpg
Figure 2. (above) - Schematic of the new HG2 unit. The HG2 unit currently in development will be 1/3 of the size of the current HydraGEN™ HG1 model. The smaller size will allow for new applications on Class 2-5 trucks, as well as refrigerated trailers. The market size for the HG2 is 20 million trucks in North America. Market size for each Europe and Asia would be roughly the same.
EXPANSION INTO OTHER SECTORS: The Company eventually plans to expand into the power generation market and also the marine and rail market where the size of the HG system required to service say a single 30,000hp engine alone could generates near US$500,000 (from one sale alone). In the interim, targets for valuation of dynaCERT Inc. surrounding its HG-1 units alone, assuming only nominal adoption of the technology point to significantly higher share price for DYA.V; analyst Jay Taylor of Hard Money Advisors Inc. currently maintains coverage on dynaCERT Inc. with a 'Buy' recommendation and near-term (12 month) price target of US$2 to $2.50/share (~$2.60 to $3.30 Canadian).
image: https://www.stockhouse.com/getattachment/db0ec4b7-67fc-487d-ad7a-21c38e254b66/fred-3.jpg
Earlier this year, when asked about the size of other (marine shipping, rail, and power generation) markets relative to truck market, the CEO stated that they are
"10 times greater in dollar value. The smaller/average-size power generation we are actually penetrating that now -- we will be announcing something very shortly concerning that [note: in May-2017 dynaCERT announced a
Collaboration with Northwest Territory Power Corp.]
. With the shipping, and rail, it is something that will take a little longer and we are not expected to take that to the market until earlier next year. But when we penetrate with something like that, a huge power generator – something like that is a half a million dollar unit as opposed to something in the trucking market which is short of $10,000 unit." -- we note:
just one container ship puts out the equivalent emissions of 50 million cars per annum [
click to view related link].
We have identified the following research links for further DD on dynaCERT Inc.:
- dynaCERT Inc. corporate website:
https://www.dynacert.com - SEDAR Filings for dynaCERT:
https://sedar.com/DisplayProfile.do?lang=EN&issuerType=03&issuerNo=00020269 - Jay Taylor's recommendation/advisory on dynaCERT:
https://sectornewswire.com/JTaylorDYA112516.pdf - Recent Technology Journal review of dynaCERT:
https://technologymarketwatch.com/dya.htm Fredrick William, BA Ec.
Fredrick is a freelance information services professional for various media relation firms and consultant to several financial publications. He monitors and invests in the resource, technology, consumer staples, healthcare, agriculture, financial, energy, utilities, and biotechnology/pharmaceutical sectors and is the managing director of Market Equities Research Group.
***
Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. The author has based this document on information obtained from sources he believes to be reliable but which has not been independently verified. The author makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of the author only and are subject to change without notice. The author assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, the author assumes no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report. The author does not currently own shares of dynaCERT Inc. TSX-V:DYA however intends to accumulate.