RBC LCFS Foundation Report excerptsHere you go @Wynner
Investment summary
We expect Tidewater Renewables’ shares to perform in line with its peers for the following key reasons:
• Potential for strong cash flow contribution, but uncertainty over the timing and magnitude of an LCFS recovery. If B.C. LCFS credit prices recover, we believe the facility could produce roughly $120 million in annual EBITDA. However, given the uncertainty with respect to the time frame and magnitude of a recovery in B.C. LCFS credit prices, we believe material upside in the shares may be capped.
• An early mover with an ability to leverage Tidewater Midstream’s existing platform. With minimal renewable diesel production in Canada at present, we think the company will benefit from being an early mover that can leverage Tidewater Midstream’s existing assets to drive strong economics for its projects.
• Feedstock flexibility and security help mitigate pressures of increased competition. By incorporating a pre-treatment unit at the renewable diesel and renewable hydrogen complex and securing tallow and used cooking feedstock volumes (historically waste products with little market value), we think the company is well positioned to use minimal volumes of higher-cost feedstocks such as vegetable oils.
•Potential catalysts. The renewable diesel project generating EBITDA consistent with management's guidance for "run rate" EBITDA; increases in renewable diesel pricing; further favourable announcements related to securing feedstock volumes or LCFS and CFR credit values.
Sector Perform Speculative Risk TSX: LCFS; CAD 1.74 Price Target CAD 5.00
Key Statistics
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Strategic Ownership: Tidewater Midstream owns 69%