Cielo Waste Solutions Corp. V.CMC.WT

Echelon Wealth - Buy - $1.00 target

[Dunworkin2]

21 Dec. 2021

CMC

Echelon Wealth Partners

Michael Mueller CFA

7,414

BUY

$1.00

[lscfa]

Values Aldersyde at $0.03/sh and Fort Sask. phase 1 at $0.15/sh.   

[lscfa]

Report dated Nov 24/21.  The July report had a TP of $1.70.  There must have been another report prior to Nov 24 that reduced TP to $1.00 because analyst says little change to his current forecast. His July forecast was for revenue of $26.2 million revenue in 2023. Nov report shows $5.4 million revenue for 2023. This means analyst was aware of reduced forecast volumes at Aldersyde

[lscfa]

Just like McWhirter, Echelon blindly buys mgmt BS that co. will be able to sell its renewable diesel for $1.60/litre when traditional biodiesel is at $1.25/litre. Why the hell would a blender pay a 28% premium to use renewable diesel? The govt. mandated blending levels mean biodiesel works fine in winter conditions. Analyst should assume Cielo will not receive more than the biodiesel price

[lscfa]

Flawed analysis. Analyst assumes no additional shares will be issued despite assuming each plant can only raise 60% in project debt financing. He assumes that the 100% Cielo-owned plants (Aldersyde and Fort Sask phases 1,2,3) will cost $163 million so 40% equity financed means $65 million to be raised.   "In our analysis summarized in Exhibit 1, we have assumed project-level debt