Post by
SORNG1 on Mar 15, 2021 9:47am
Post from Yahoo Comment Board
I wanted to share a recent post from the Yahoo Comment Board. Comes from Chris and lists the late 2020 activity of Xebec. Acquisitions cost money, the payoff is the future growth and revenues. Both HyGEAR and Inmatec were not completed in 2020 so only acquisition costs. Revenue will be coming in during 2021. It's an impressive list of accomplishments by Xebec in 2020. It's your choice whether it's positive or negative. Buy or sell after your analysis.
Post from Chris on Yahoo Comment Board:
So by now we’ve all seen the information re: Updated guidance from Xebec for 2020, rev’s look like it’ll be approximately $57M instead of the $70-$80M projected based on the two reported reasons.
Market cap at this point is $829.09M at this point, pps $5.46 CAD
P/S is approx 14.54. They’re not profitable but mainly due to increased SG&A, reduced gross margin, and reduced productivity due to Covid. Increased SG&A is due to scale up of employees and costs to increase sales but also increased one-time costs relating to acquisitions.
30Sep2020 cash on hand $51.9M. What happened during Q3?
1) Acquired Air flow to expand Cleantech. Air flow had reves of approx $10.1M FY ending 31Dec2019 and expects organic growth of approx 10% in 2020 with EBIDTA Margin of ~10%
2) Acquired Applied compression systems to expand cleantech. ACS had revenues of over $8.0 last twelve months with EBIDTA margin of approx 12%
30Oct2020 they acquired The Titus company to further expand cleantech. Titus had revenues of $12.3M for FY2019 with 13.5% EBIDTA Margin
08Dec2020 announces acquisition of Hygear and completes this acquisition 31Dec2020
17Dec2020 announces acquisition of Inmatec to enter German hydrogen and RNG markets
11Feb2021 announces hydrogen order for fuelcell Energy’s Port of long beach project that will demonstrate Xebec’s abilities to be part of the FCEV transition. (Revenue not expected until Q3).
16Feb2021 announces hydrogen supply strategy in UK through Hygear, a GAAS contract with Saint-Gobain Glass for a 15 year term - They are publicly traded with a MC of 26.26B. This is a big deal. They aslo delivered an onsite hydrogen generation system to Kiwa Group in Birgmingham. According to linkedin, Kiwa group have at least 1.1k employees listed.
Xebec notes “The hydrogen supply launch in the United Kingdom is expected to provide a foundational blueprint for Xebec’s accelerated expansion plans of setting up decentralized production hubs globally, and its core strategy to build hydrogen energy infrastructure by first targeting demand in industry.”
22Feb2021 Completes acquisition of inmatec which positions Xebec to execute and accelerate its distributed renewable and low carbon gas strategy.
Hygear revs 9 months ended 2020 6.48M CAD, net loss 1.68M vs FY2019 16.9m and net income of 2.2M. They project 30% reduction of revenues due to Covid but seeing improvements since Q2 2020. They do have LT debt of $32M but still has positive book value.
So what does this all say for us? Covid likely caused some financial issues to some of Xebec’s customer. This is likely what resulted in the reversal of revenues and cancellation of projects. But they’re only reporting for what happened in 2020. Hygear was impacted by approx 30% as well. The sell off imo is panic, it does not consider the fact that as recent as October 2020, a LOT has happened., Hygear is going to be transformative for Xebec and I think it’s being undervalued. Keep in mind, A syndicate of underwriters purchased 24M shares in December 2020 for a price of $5.8/share along with upsized private placement of 10.9m shares at the same price. You can now buy under that price. Hygear brought in Revs of $16.9M in 2020 alone, the future for hydrogen is bright
So if we assume that There’s no growth in 2020, but we add in Hygear assuming they DONT return to pre-covid and no growth (30% reduction in revs from 2019). Revs are pegged at approx $68.83 2021. If we assume no growth for Xebec. If hygear returns to baseline of just $16.9M, its $73.9M revs.
$829.09 MC with Revs of $73.9M at $5.46 pps is 11.21 2021 sales at No growth at all.
If we compare to Greenlane which is what I see a lot of people talking about, $268.84M MC with 2020 Revs of $22.5M which was an increase of 147% YOY but mainly due to PT Biogas acquisition. P/S is 11.94.
If you’re here investing in Xebec you believe that the world is continuing with its efforts to achieve carbon neutral and this is just the beginning. Covid hurt many companies beyond this one but the management team didn’t stop in acquisitions and expanding their services. I’m confident that post Q4 earnings call, Management will give a better outlook of how all these acquisitions set up Xebec for increasing growth. And yes i did BTFD.
Comment by
Ciao on Mar 15, 2021 10:02am
" If we assume no growth for Xebec. If hygear returns to baseline of just $16.9M, its $73.9M revs." That's reaching really low. In the Nov. XBC presentation, the CSN side of the business alone was projecting $54M in rev for 2021, mainly from getting a full years' rev from a few of the acquistions and approx. 10% growth from the others.