RE:Let's disect the Paradigm report tamaracktop wrote: For starters, Gill writes:
"Headquartered in Blainville, Que., Xebec Adsorption designs, manufactures, and sells purification, separation, dehydration, and filtration equipment for gases and compressed air in Canada, the United States, China, Korea, Italy, France, and internationally in the systems, infrastructure, and support segments."
Does that even sound like an accurate description of what Xebec does?
"purification, separation, dehydration, and filtration"???
It doesn't even come close, to me.
He might even have conceded that Xebec is headquartered in Montreal, a more familiar name.
Blainville is a suburb of Montreal
Then there's this:
"After finishing 2021 with $125.9 million in revenue, Gill forecasts a jump to $191.7 million in 2022, good for a year-over-year increase of 52.3 per cent. Looking ahead to 2023, Gill sees the revenue figure climbing to $212.1 million for a potential year-over-year increase of 10.6 per cent."
How can any analyst possibly even pretend to be legitimate when he forecasts 52% growth next year followed by a forecast of 10% growth two years down the road?
He offers no supporting argument for this conclusion at all.
Who does this guy think he is, Nostradamus?
I've never even known a company to give revenue guidance for two years ahead.
I call BS.
Then he finally goes on to conclude with this beauty:
In terms of valuation, Gill forecasts the company’s EV/Sales multiple dropping from the reported 2.4x in 2021 to a projected 1.6x in 2022, then to a projected 1.5x in 2023.
How in the world does he arrive at his conclusion that Xebec's EV/Sales multiple will contract from 2.4x to 1.5x?
I'll tell you how.
He bases his prediction of multiple contraction once again on his completely fabricated projection of a steep decline in growth rates, which I've already suggested have no basis in fact whatsoever.
In actual fact, a successful launch of biostream as well as a rapid launch of Boo projects in Quebec alone could actually increase Xebec's growth rate.
At full production, given current capacity, Biostream alone could produce revenues in excess of $240 million annually, forgetting Hygear, and Inmatec, and Boo, and Service and Support.
His report is garbage.
Gill forecasts another significant move in 2022, with the $207.1 million forecast representing a 64 per cent year-over-year increase. From there, he forecasts continued growth in 2023 at $292.6 million for a 41 per cent year-over-year increase, with an eventual jump to a projected $367.4 million by 2025.From a valuation perspective, Gill forecasts the companys EV/Sales multiple to drop from 2.2x in 2021 to a projected 1.4x in 2022, then to a projected 1x in 2023. With the positive turn expected, Gill introduces EV/EBITDA multiple projections in 2022 at 53.9x, then forecasts a drop to 15.5x in 2024. We believe this valuation will be realized as margins improve and the order backlog continues to see solid momentum (with the potential CCS compression unit order a major near-term driver), Gill said.We believe the 2024 plan provides clarity on revenue and profitability goals and we take that as a positive for the stock, Gill said.