Anaergia Inc T.ANRG

TD Report

[retiredcf]

Anaergia Inc.

(ANRG-T) C$14.01

One Man's Trash is Anaergia's Treasure; Initiating at SPEC BUY Event

We are initiating coverage on Anaergia Inc. with a SPECULATIVE BUY rating and $40.00 target price. A more detailed report will be published later today.

Integrated Technology and Product Portfolio to Convert Municipal Waste into RNG: We believe that Anaergia is the unrivalled global leader in extracting organic materials from municipal waste streams (organics extracted from mixed solid waste, wastewater sludge) to convert them into Renewable Natural Gas (RNG). In our view, this feedstock pathway has incredibly attractive long-term tailwinds, including growing regulations that aim to reduce emissions, as well as increasingly stringent regulations that aim to divert waste from landfills. Additionally, the company's primary focus is on municipal waste streams that results in a business model well-suited for large-scale projects, in our opinion. Notably, Anaergia recently completed the construction of the largest diverted organics RNG facility in North America.

Shifting to a Build Own Operate (BOO) Model: In conjunction with the IPO, the company is shifting to a growing BOO infrastructure model in order to scale the business and take advantage of a very lucrative regulatory environment. The company has articulated a five-year, $1 billion capital program with a 30% equity and 70% debt project-level financing structure, and we calculate that the IPO proceeds of $175 million will allow the company to fund projects well beyond the eight identified projects currently under construction or with contracted terms.

TD Investment Conclusion

In our view, Anaergia's broad intellectual property portfolio, strategic focus on municipal waste, and the pursuit of a growth-focused infrastructure model make it a high-quality option in the RNG and low-carbon fuels investable universe. Despite our view that Anaergia possesses high-quality attributes, the stock is trading at an EV/EBITDAS discount to other companies in the RNG sector. Our primary valuation methodology utilizes a 10-year DCF calculation, resulting in a $40.00 target price, representing meaningful upside from its current valuation. As a result, we are initiating coverage on Anaergia with a SPECULATIVE BUY rating. Although we have initiated coverage with a SPECULATIVE risk rating, we believe that Anaergia features a significantly lower risk profile and the most commercial-ready business model of the three companies in our clean-tech coverage universe and would look to revisit our risk rating if our estimates are met.

[mo1975]

tks retirecf... got in today for a small amount of shares at 14.45   i liked the closing rate.... it seems that with the way the governments put pressure on low emissions this could be a good stock to keep investing in and built a reasonable stake