Still have a $30.00 target. GLTA
Anaergia Inc.
(ANRG-T) C$6.85
Potential Capital Sale, Service Contract Disclosed by Partner Event
On Friday, June 24, 2022, EQTEC announced that it has engaged Anaergia to build and operate its Southport RNG project in the U.K. (press release).
Impact: POTENTIALLY POSITIVE
Details: EQTEC announced that Anaergia has been engaged to construct a 80,000 tonne per year waste processing facility featuring its OREXTM technology and an
anaerobic digestion facility designed to produce 6 million cubic meters (~212,000 MMBTU) of RNG per year. If the project goes ahead, Anaergia will take a full Engineering, Procurement, and Construction role on a fixed price, lump sum contract for the construction work scope, which adds a level of execution risk for Anaergia. The agreement also includes a separate, minimum five-year contract to operate and maintain the facilities noted above. No financial details or discussion of potential timeline was provided in the press release. However, we note that this project appears to be larger than the range of its Italian BOO facilities, which feature a capital commitment range of between $20 million and $50 million.
TD View: Recall that this project would represent the second potential project with EQTEC, the first of which was disclosed in October 2021 (full report), and neither are currently in Anaergia's backlog at this time. To this end, we expect that Anaergia may not disclose this project until it has signed a definitive agreement to proceed. As a result, we are not making any changes to our forecast at this time and our investment thesis remains unchanged. In our view, this potential award highlights the depth of Anaergia's intellectual property portfolio as well as its technical expertise, and the ability to deliver meaningful backlog additions across a global opportunity set and in light of a strong fundamental growth backdrop for the RNG sector. We continue to believe that Anaergia is the the most commercial-ready business model in our Clean Technology coverage universe and remains our top pick.