FormerXBC Inc XEBEQ

TD Initiates Analyst Coverage with 12-month $6.50 PT

[RandomMaker]

Xebec Adsorption Inc. (XBC-V) C$4.18 Profitable Today, Powering Tomorrow; Initiating at BUY

Event

We are initiating coverage on Xebec Adsorbtion Inc. with a BUY rating and $6.50

target price.
 

Note: A more detailed report will be published later today
 

Product Portfolio a Beneficiary of Secular Environmental Trends: Xebec’s core

product portfolio has found applications in the build-out of Renewable Natural Gas

(RNG) and Hydrogen infrastructure. Specifically, Xebec’s adsorption technology

purifies raw input gasses into environmentally friendly fuels that meet stringent

commercial specifications and is a key component of each of its end-market fuel

production. Infrastructure investment that addresses global warming is accelerating,

and is being driven by ‘green’ government fiscal stimulus and by corporations in

Xebec’s case gas utilities that are increasingly being graded on an Environmental,

Social and Governance (ESG) scorecard. We believe that Xebec has a preferential

product in the cleantech end-markets that it serves and, as a result, a compelling

case for significant growth can be made.
 

Opportunistic M&A Strategy: Xebec is taking advantage of its current valuation

(2021E EV/EBITDAS of 23.5x) to buy related industrial businesses that sell and

service compressed air dryers and filtration systems between 4x and 6x EBITDAS.

Xebec intends to transform this growing geographic network of legacy businesses

into its service and support platform for its Cleantech Solutions segment products.

This strategy not only has a strong fundamental case, but it is also incredibly

accretive to Xebec shareholders, based on our estimates.
 

Profitability a Differentiator: The company has already demonstrated an ability

to generate positive earnings, which we view as a key differentiator compared with

other cleantech and early-stage growth investments.
 

TD Investment Conclusion
 

We believe that Xebec checks several boxes for growth-oriented investors, including:

a strong ESG case featuring both the environmentally focused trends that underpin

its growth narrative and strong insider ownership (CEO: 7.2%), a track-record

of successful project execution, including full-cycle service, profitability, and a

preferential technology that sets it apart. Although a presumption of future growth

is reflected in Xebec’s current valuation, we believe that our NAV calculation

contemplates fairly conservative assumptions while still implying a much higher

valuation. As a result, we are initiating coverage on Xebec Adsorption Inc. (XBC-V)

with a BUY rating and $6.50 target price.

[retiredcf]

Good to see that XBC is now moving into the mainstream by picking up analyst coverage from one of the Big 5 who don't normally cover many companies on the VSX. Might expect a few of the others to eventually join the party. GLTA

[ddogold]

Definately an important stepping stone for Xebec . A great way to start Q4 as we can expect a number of important news releases which should push us to new highs . :)

[Possibleidiot01]

I like to pull key points out of reports. I picked four but there are more of importance. "We believe that Xebec has a preferential product in the cleantech end-markets that it serves and, as a result, a compelling case for significant growth can be made."    Note compelling. "a track-record of successful project execution, including full-cycle service

[tamaracktop]

Read carefully:..... "we believe that our NAV calculation contemplates fairly conservative assumptions while still implying a much higher valuation."

[Possibleidiot01]

That was the last of the four points I highlighted from the report. i did not bother to comment on the implication of potential share price  explosiveness ;)

[ZouZS3]

Then came TD's report! People Do you realize we have an expert on this board. TT the Great!