FormerXBC Inc XEBEQ

Big fish in a big pond.... not yet

[GGreen]

Now that I've had 24 hrs to digest the PR here are my thoughts.

Is this announcement +ve and encouraging? Yes. Is it as big a deal as I was hoping for (and by the way many others on this board BTW)? No.

XBC gets points for having orchestrated a funding vehicle for BOO projects IN QUEBEC (granted it has be a leader along with B.C.) but...
- from the "The market for renewable natural gas in Canada is still in its infancy." So it's very early (but promising).
- this isn't XBC RNG QC FUND for the exclusive use of XBC, there will be a board, governance, proposals, review process, co-funding through debt requirement (another opp for FTQ to get headlines) Wouldn't it be ironic if GRN and other competitors get funding?
- the real winner here was FTQ. Why? They need to show that They are doing something in the ESG space in QC "Hey XBC, how 'bout I give you $10M unsecured loan (PR) and then 2-3 weeks later you give it back to me (with warrants and pay me interest) so we can announce that we started a ESG capital fund for RNG in QC (another PR) - btw put out your underwhelming Q1 results with a carrot of a national strategy partner to follow so the stock doesn't get beaten up". (BTW on the Q1 call, CEO said  more or less "we didn't have time to get the partnership done in time for this call" I call BULL! I suggest, that this was already "done" when the $10M was announced  IMO. 
- Fund is seeded with 2.5% of $400m required to meet # of projects - oh yeah the rest is for other PRs!
- I live in Quebec so a "national" strategy here means something slightly different than in the rest of Canada so I guess they were right on that (a bit tongue in cheek). I realize it's the start of a national strategy. 

Let's see what info comes out in conf call (but I expect it will be short on details given gov't is involved). 

My big picture: I'm a LT believer that they have something but I don't have pom-poms or horns and suggest we remind ourselves that:

- we are in the middle of a pandemic with no vaccine at this time. CEO "We're not going to be affected significantly" BULL perhaps operationally we can get through the day to day of projects under way but do you really think that the provincial premiers and prime minister have their green plans on the corner of their desks? It's not even in the room! They all have other much bigger priorities this year and next.
- on that note, "we're still going to meet our 2020 revenue target of +/- $90m" I hope so but I don't think so (but they can blame COVID so markets will forgive them). To a point I've made before. UBDER PROMISE, OVER DELIVER! especially in the uncertain environment we are in.
- we have a JV in China. That's positive right? Could be but the whole China-Canada relationship maybe soon be even more rocky (along with many other countries). If you're not familiar with the 36 Chinese strategems, go Google it. I read up on it before going to Beijing to negotiate a contract - I was flabbergasted as I saw them use them live on us, so forgive me if I have some distrust for Chinese business partners. ( that's worth a post on to itself)
- infrastructure plays are a good bet. Oh yeah ask shareholders BAM.A and BIP. These CO's have billions of capital and big, smart mgmt teams but I'm waiting a bit longer before jumping back into them for the longer term.

To end on some positives:
- this is a good start
- they have a good balance, well capitalized and mgmt for where they are now in their rollout
- solid sales back log, large quote log (need to close deals which will then list stock)
- uplisting to TSX should be within couple of months
- XBC has the ESG tailwinds and expanded pool of potential investors from previous point

Conclusion: long road ahead with short-term uncertainties but think XBC will provide good returns (already has!)