Get Ready for Lift-off Hi folks, been following the board for about four years now. Seems its got a little dull of late so I finally decided to make an account and post.
First, let me start by saying that I understand there seems to be a lot of frustration out there. It's been a long and grueling road no doubt, filled with ups and downs. I think we are finally nearing the end of the tunnel, and the light is blinding!
Let me explain why this is truly a once lifetime opportunity:
The world is desperate for solutions to reduce emissions and combat climate change. The trend towards sustainability isn't going anywhere and will only continue to accelerate as times goes on. I'll touch more on this later.
The transportation industry is one of the largest sectors in any advanced economy. In the US, the transportation sector made up 28% of total Greenhouse Gases in 2018. dynaCERT has proven and been certified by some of the most rigorous testing facilities around the world (iCat, TUV Nord, Sud etc) to reduce emissions by about 50% on average. This is just one of many industries dynaCERT is targetting. HydraGEN has the potential to cut a double-digit percentage of total GLOBAL greenhouse emissions. The significance of this cannot be understated. This technology will be crucial in combating climate change and bridging the gap between now and zero-emission technologies. (It should be clear by now it will be a multi-decade transition to zero-emission vehicles such as electric, hydogen etc). There are over a BILLION diesel engines globally, with something like 100 million being produced annually.
https://www.epa.gov/ghgemissions/sources-greenhouse-gas-emissions
Furthermore, the tech has significant economic benefits, primarily fuel savings, but also reduced diesel exhaust fluid, particulate filter changes/regens, oil changes, downtime & maintenance and extended engine life. (the emission control systems seem to be the primary aggravator and cause of downtime and have been noted to cost upwards of $7500 a year just to maintain) dynaCERT has said that long haul trucks have a payback of 12 months or less just on fuel savings alone.
Lastly, dynaCERT is working towards being able to track, monitor and accumulate carbon credits through the HydraGEN technology. Supporting this initiative are individuals who developed the underlying software behind Paypal, ApplePay, etc.
Perfect Storm Brewing in Europe:
- New legislation mandating reduced Co2 emissions in the passenger vehicle and other markets. We know most major OEM's are already looking at or in talks with dynaCERT. Mosolf and dynaCERT formed a joint venture to address this massive market.
- War on NOx. Europe is aggressively looking to reduce NOx emissions, the most deadly gas produced by diesel engines.
- Europe is the largest carbon credit market in the world is actively working to expand its ability to track, monitor and trade carbon credits throughout the economy. Currently, about 45% of EU greenhouse gas emissions are covered. Through the HydraGEN technology this can be significantly expanded to include much of the transportation sector, which as mentioned earlier, is one of the largest sectors of the economy.
https://ec.europa.eu/clima/policies/ets_en
It should come as no surprise then that this technology is the perfect fit to help Europe meet its goals of a zero-carbon economy by 2050 (which has been drafted into law).
https://ec.europa.eu/commission/presscorner/detail/en/ip_20_335
To further this effort, dynaCERT has a strong partner to drive this forward; Mosolf, which has operations across Europe. Dr. Mosolf investing his own money into dynaCERT and is also President of the German Transport Forum, and is spearheading government relations there.
We have already seen, in the past, over $600m be allocated to diesel retrofits. Separately, the city of Copenhagen allocated over $100m to retrofiting diesel busses. HydraGEN technology is a much better solution as its reduces emissions at the source, opposed to filtration systems, and pays for itself (not to mention carbon credits). I anticipate it is a matter of time before this becomes mandated across Europe, or is at the very least significantly adopted. Europe has more recently proposed massive stimulus of over $1 Trillion, aimed to not just boost the economy but address climate change and work towards the zero-carbon by 2050 agenda. That is just one significant market. China and India (two of the largest global emitters) are also starting to roll out similar cap-and-trade programs.
Personnel:
The team at dynaCERT continues to strengthen, with extensive-background individuals such as:
- David Bridge (formerly held high level positions at Blackberry, AMD, RBC Financial etc) overseeing the technical side of the ECU & patents.
- the Head Engineer of TUV SUD (the most rigorous testing facility in the world) resigning to join dynaCERT after being converted from a skeptic to "this is the future of diesel"
https://www.globenewswire.com/news-release/2019/07/10/1880619/0/en/T%C3%9CV-S%C3%BCd-Lahr-Germany-Head-Engineer-Resigns-to-Join-dynaCERT-GmbH-and-dynaCERT-s-HydraGEN-TM-Wins-Gold-Award-from-ESQR-in-Germany.html
- to an extensive list of dealers, partners and investors (Eric Sprott)
With markets and the economy recovering from the Covid lockdown, and the upcoming TSX listing, I expect the stock will re-test all-time highs in the near future as the opportunity is completely massive and the stock price does not reflect this.
The Economics:
As an investor, dynaCERT has one of the best business models, and superior economics to most businesses:
- Gross margins in excess of 70% for past three quarters. Jim stated 50% net margins once ramped up. At first I was skeptical, but this actually looks possible now with introduction of the subscription model and carbon credits (which increases margins opposed to only selling hardware)
- Low operating costs (assembly line was a relatively small investment, and their lease is minimal when considering their potential $1B+ capacity in a small footprint.
- Limited working capital required when taking deposits on orders (self-sustaining)
- Significant profit and Free-cash-flow (equals high returns for shareholders, think buybacks/dividends not to mention higher valuation multiples)
Bears will say the tech doesn't work but there is lots of proof out there that the tech is delivering results. We have seen the units undergoing lots of change and improvements over the past years. I suspect there are still some final kinks being worked out which is why the company has been quiet and sales have not yet exploded. But it seems we are rapidly approaching this point ( assembly line installed, revenue starting to grow etc)
We also know that most major trucking fleets are eyeing dynaCERT and eager to buy the tech once its ready to go. Last I heard, major fleets such as IFS, Loblaw, and more recently Day & Ross, & Canadian Tire are trialling the technology. Not to mention most major global mining players have begun trialling or are in conversation with dynaCERTS dealer H2 Tek.
Final note:
Tried to limit the amount of detail I included here. Lastly, i'll include some of my own thoughts and assumptions based off years of extensive due diligence, so feel free to ignore this part if you wish but i'll share for those who would like some idea of what the stock could be worth.
My long-term thesis (now i'm thinking 10+ years out) involves a multi-hundred dollar share price, yes that's $100+, which would look like five or more assembly plants operating globally (dynaCERT is already looking at setting up in Mexico, India and Europe), high margins (at least 50% gross margins), at least $5B in annual hardware sales, and a significant revenue stream from carbon credits. Looking closer, I think a $10B valuation is possible within five years of achieving profibility. So obviously, that is super-robust ROI potential. Of course, this all depends on the technology becoming commercially viable (which appears to be very soon, if not already)
My advice:
Always do your own due diligence before making an investment. Keep your focus on the big picture and stick to the long view.
Things are finally shaping up after a long and grueling 15 year journey. It is almost harvesting season. Best wishes to everyone.
Cheers