FormerXBC Inc XEBEQ

TD calls BS on Plan Downgrades LOL

[savyinvestor333]

Event We are downgrading Xebec to HOLD.

Impact: NEGATIVE

Our View on Management's Three-year Plan: Management is guiding to 2024 revenues of $300 million-$350 million and an EBITDA margin of 8-10%. Our NAV (Exhibit 3) features $275.3 million in revenues and $22.2 million in EBITDA (8.1% EBITDA margin). In our view, management's 2024 revenue scenario is optimistic and we highlight two areas of potential risk:
1) Implied RNG Demand Growth Scenario: The three-year plan assumes 100 Biostream orders per year, which it believes would equate to a 25% market share. The annual industry-wide production growth implied in Xebec's 2024 scenario is materially larger than the cumulative dairy and swine-based RNG production currently earning credits in California's LCFS program. Although this project profile has demonstrated significant growth in recent years, we note that California LCFS credit pricing has declined ~6.5% year-to-date due to an oversupply of credits. Overall project economics for this project profile rely heavily on the LCFS credit value. As a result, our updated forecasts incorporate a more modest growth profile.
2) Financing its Growth Initiatives: The three-year plan also features the construction of 20-25 hydrogen production hubs ($2.5 million-$4.5 million per hub) and a modest amount of 'strategic' acquisitions to expand its service network.
Although Xebec intends to find a financing partner for its hub strategy, our forecasts feature negative funds flow from operations for the foreseeable future and the company already has high leverage ratios and limited financial flexibility. As a result, we are not contemplating any M&A in our forecasts and our 2022 and 2023 capital spending assumptions would be sufficient to build 4-8 hydrogen production hubs.

TD Investment Conclusion Our 2022 and 2023 EBITDA estimates decrease by $8.8 million and $11.3 million, respectively, due to downward revisions to our margin expectations. These lower margin assumptions are also contemplated in our NAV, resulting in a $2.75 target price (down from $3.00 previously). Our return to target is no longer sufficient to maintain a Speculative Buy rating. As a result, we are downgrading Xebec to HOLD

[Ciao]

I thought I was reading an excerpt from the internal short report. Their thesis is xbc needs a financing and we'll hammer the stock and cover at a deeply discounted share price. Share price manipulation is just a fairy tale...lol. 

[Ciao]

" The three-year plan assumes 100 Biostream orders per year, which it believes would equate to a 25% market share. " The bias with inaccurate reporting is blatant. The target was to ramp up sales so that by 2024 they would target 100 plus units that year. They did not project 100 BGX units each and every year. 100 BGX units a year is about $190M in annual rev, starting this year...lol

[filoux004]

I must admit these brokerage firms are like a three ring Circus. Is Brian Levitt still on the board. Just kidding I guess the analyst is entitled to his opinion. Long XBC and Peace

[sjc444]

Am I the only one who is surprised that the company has only talked about using Biostream in North America? Why not Europe and Asia?

[Magicmike67]

I'm sure they have intrest from and are planning to sell in Europe. From Xebec's AIF.... Xebec Italy S.r.l. Milan, Italy This office services all Xebec BGX systems sold in Europe