Enerdynamic Hybrid Technologies (“EHT”)(TSX: V.EHT, Stock Forum), a Canadian small-cap alternative power tech firm, hit the market with a bang in September 2014. The appeal of EHT was partially fueled by an increasing global adoption of technology, creating a world ever hungrier for power. This demand is especially explosive in emerging economies, but grid infrastructures in those regions are highly instable and require major upgrades, making large power generation projects, even alternative ones like solar and wind, cost prohibitive and as a result, leaving an incredibly prospective demographic virtually untapped.
However, through patented proprietary technology, EHT came up with an affordable individually-sized, grid independent solution to these challenges by combining solar, wind and energy storage in an easily assembled unit that can be shipped anywhere in the world and put together by the end user to supply power within one hour. This technology has the ability to shape the future of energy generation and third-world development.
It was for this reason that I sat down with John Gamble, EHT CEO, and discussed the company, its product and its potential.
EHT’s seemingly altruistic marketing plan to open the African market raised some eyebrows, with both traders and analysts speculating management had taken the company in an unprofitable and potentially damaging direction. Gamble answered these claims, “There is a tremendous misconception of Africa. I’ve made many trips there and it’s not a bad place to be. Sure, there are certain countries, like Nigeria, that even though that market has substantial financial resources, it also has issues of political instability while other places like Somalia is very difficult to do business in. But there are places like these all over the world.”
“What the public and the markets need to understand is there are favorable regions as well. For instance, we’ve centered our efforts on West Africa and more specifically the Ivory Coast which is incredibly stable and business friendly. For example, going to the Ivory Coast is like going to New York. They have a GDP growth of over 12%, a free port that handles 40% of West African goods, and have most of the infrastructure of a major American metropolis. In short, Africa does have a middle class with money and they need power. We intend to fill that need.”
This is not to say that the company is ignoring domestic markets. Gamble explained that the alternative power sectors in both the US and Canada, unlike the UK, are still emerging, and have plenty of potential. As a result, EHT has been creating a footprint closer to home with large power generation projects like the transformative deal it just signed under the Ontario FIT program to install 143 commercial rooftop solar panels for the Peel School District. Once installations are complete, the project is expected to generate $15.0 million annually in recurring revenue. Gamble also pointed out that there is also further potential in the Canadian market based on the regulation of pricing for solar panels imported from China. This decision is expected in July this year and could be a tremendous boon to domestic suppliers.
Gamble mentioned another factor that will contribute to the future success in Africa as well as domestic markets. Technological advancements in solar and wind as well as the anticipated technological jump in energy storage of lithium batteries are not only increasing efficiencies, but are markedly dropping costs, making these units even more affordable in developing economies. And if families are still unable to afford them, banks have recognized the long term economic benefits of these units and are willing to lend to those requiring them.
Gamble also illustrated a growing global trend toward grid independence in all economic regions as governments are seeing less upside to grid upgrades and maintenance as products such as EHT’s portable alternative power generation and storage offerings are evolving into powerfully cost-effective options that can be assembled and managed by end users. As the world continues this shift, Gamble sees other potential recurring revenue streams in the carbon credit market.
Should be an easy run, but developing tech and marketing it on the leading edge of a burgeoning trend is not without its challenges. One of the main ones Gamble mentioned was capital, especially for small caps now that the big boards are getting hammered by falling commodity prices such as the diving price of oil which fell to ~US$42 per barrel this week. However, even with the market-wide increased challenge for financing, Gamble is confident that the strengths in EHT’s vision and product pipeline will continue to woo institutional investors during those all-important funding rounds as the company continues to build out its international reach.
Speaking of finances, as mentioned before, EHT has been in a growth phase since 2013 and even though it reached revenues of $10.0 million in 2014, the company is still making its way toward a cash-positive position. However, Gamble expects to hit this milestone in Q3 or Q4 this year.
That said, this company is not for the fickle daytrader looking for quick profits. During the last year as EHT perfected its micro-wind technology and built its marketing platform, faint-hearted retail investors have left the fold, driving down share price, but the company has maintained a tightly-held core of believers, creating an undervalued, potentially lucrative opportunity for longs with vision. It will be interesting to see how EHT shapes itself over the next 24 months as it continues to work on developing its relationships in Africa and widening its North American footprint.
Fox Business Network caught up with Gamble and Mario Zen, VP of Business Development, for an in depth look at EHT on the popular segment, Corporate Review, which was broadcast March 21, 2015 at 5:30 pm EST. Watch the video of this unique opportunity below:
FULL DISCLOSURE: Enerdynamic Hybrid Technologies is a Stockhouse Publishing client.