A lot of companies lately have been completely decimated during the Coronavirus outbreak, however today we will be going over our top 3 favorite green technology companies we believe investors may want to keep track of once the tides begin to turn for the better in global equities.
Greenlane Renewables (TSX-V:GRN) is a green energy company that has had a huge rally starting in November from $.175 cents to $.85 cents on February 19th for a total gain of 385%. Since then, shares of GRN plummet by -75% since the February highs due to the outbreak of Covid-19. Greenlane Renewables is a growing company that provides biogas upgrades which aid in decarbonizing natural gas, that ultimately leads to producing clean, low-carbon renewable natural gas from organic waste sources.
On February 6th 2020, Greenlane announced that GRN’s wholly owned subsidiary Greenlane Biogas North America Ltd. has signed a new $7 million contract with Renewable Natural Gas Company (“RNGC”) of Pennsylvania. Under the contract, GRN will supply three biogas upgrading systems which will use the company’s water wash technology. GRN’s biogas system will be implemented for RNGC’s landfill gas projects in both Virginia and Missouri. CEO of RNGC Mr. Jeffery Craig stated, “We chose Greenlane’s water wash technology based on its reliability, price and performance,”. This is sort of validation from a company’s client that investors should note as further opportunities to increase order flow with the same client which would be very beneficial for not only the company but also its shareholders.
Greenlane Renewables announced on February 19th that it has completed a $11.5 million offering through the issuance of 23 million units at $0.50 cents per share. As of the closing price of $0.215 cents on March 23rd, this would represent a decrease of 57% from its previous financing price. To put things in better perspective, shares of GRN would have to increase 132.5% to reach previous financings levels of $0.50 cents per share. Funds from the financing will be used for a) the required payment to Pressure Technologies plc against the outstanding promissory note issued to acquire the Greenlane biogas business; b) investments in the Company’s build, own and operate biogas upgrader initiatives, and c) general corporate purposes and working capital. The company raise money at a great time right before the markets became very volatile and it should be able to allow to operate and weather the storm.
Furthermore, GRN provided a corporate update on the company’s sales pipeline and its stated that GRN has a sales pipeline in excess of $680 million as compared to $450 million as of December 2018. This represents an increase of over 50% in sales pipeline and is defined as qualified prospective projects which could convert into sales with in the next 24 months. Even if GRN were to only secure 10% of the estimated sales pipeline, this would represent approximately $68 million in revenue for GRN. This is quite attractive for a company whose market cap is only ~ $19 million.
With a previous financing priced at $.50 cents per share for $11.5 million makes GRN pretty attractive has the company currently has a market cap of approximately $19 million, and with an increased order flow, GRN may be a great renewable company to track has market sentiment starts to recover.
Kontrol Energy (CSE: KNR) (OTCQB: KNRLF) is a green tech company that we have been tracking for sometime and since markets sold off around the world, Kontrol Energy also fell victim to the recent pressures seen on equities due to the Corona virus. But is it warranted? We don’t believe so and we will highlight multiple reasons why. An important reason we believe KNR to be of great value at current levels because with a share price of $.25 cents or a market cap of $7.45 million, we view KNR to be trading approximately a 31% discount from its total 9-months of revenues as the company announced on November 28th 2019 that it had generated $10.9 million in revenue for its 9 month ending September 30th 2019.
On February 26th 2020, KNR announced that the company has received a $405,000 order from a new industrial customer located in the United States. Under the contract, KNR will provide the industrial glass manufacturing facility both process control and government regulated emissions monitoring equipment. Kontrol Energy expects to start the installation in Q2 2020 and completed in Q3 2020. The CEO of Kontrol Energy, Mr. Paul Ghezzi was quoted “Given the importance of continuous gas emission regulation and real-time data for local and state governments in the USA, we are anticipating increased demand in the gas emission monitoring sector. This demand for our solutions is further driven by the increase in accountability for greenhouse gas reductions". We expect the company may provide additional information on this project as the company completes its installation in Q3 2020.
Another interesting development that we will be looking out for later this year is the issuance of a dividend to shareholders. On January 22nd2020, KNR announced a plan of arrangement for the spin-off of one the company’s subsidiaries, Efficiency Engineering Inc. Under this plan of arrangement, the company intends to spin-off its engineering subsidiary to shareholders in the form of stock dividend with an expected ratio of 0.7. This means that if an investor has 10,000 shares of KNR, the investor will later receive 7,000 shares in Efficiency Engineering Inc. We highlighted these developments in a previous article titled “Kontrol Energy Set To Approve Dividends In Coming Months”.
More recently, KNR announced on February 24th that it has successfully completed its commercial pilots and KNR will begin production of its new leading energy technology for multi-residential, commercial, industrial building and hospitality market in Q2 2020. Kristian Lavereau, COO of KNR stated “Our SmartSuite technology delivers energy savings in real-time by automating up to 80% of heating and cooling controls and provides instant analysis and feedback through our proprietary cloud solution.”. Kontrol will begin to initiate upgrade opportunities for each of the company’s clients in Q2 2020 and KNR will be focusing on key pilot sites and customers in the United States and Saudi Arabia.
With a market cap valued at nearly 30% less of its 9-month revenues, and nearly half of its expected revenues of $15 million for full year of 2019. Investors should put KNR on their list of green tech companies to watch as the company is ramping up operations with positive developments looking to be announced in the near term.
Another new company we found in the green tech space that we like is called Xebec Adsorption Inc. Based out of Montreal, Quebec Xebec Adsorption Inc. (TSX-V: XBC) (OTCQX: XEBEF) provides gas generation, purification and filtration solutions for the energy renewables and industrial market. Xbec designs and manufacturers cutting edge technology in gas purification, generation and filtration systems for field gas, natural gas and biogas/renewable natural gas. XBC serves over 1,500 customers around the world who are looking to reduce their carbon footprint.
On February 12th 2020, XBC announced that the company received a total of $27 million in orders from dairy farmers in the United States for six turnkey biogas upgrading plants as well as small-scale Biostream™ systems to produce Renewable Natural Gas (RNG). XBC anticipates that the project will be delivered throughout the rest of 2020 and 2021 and its growth margins are set to be in line with the company’s historic levels which we pegged them to be around 32%.
Furthermore, XBC announced on February 18th 2020, that Xebec has signed an agreement with Bähler Biogas Inc., making it the company’s first Canadian renewable natural gas infrastructure project. Under the agreement, both companies will partner to develop an integrated facility that will process a variety of organic wastes for producing renewable natural gas (RNG) and biofertilizer. Located in Québec, the facility will process approximately 45,000 metric tons of organic waster per year though a process called anaerobic digestion process. The result will turn biogas that is upgraded into renewable Natural Gas (RNG) which will lead to the production of 150,000 gigajoules (GJ) of RNF and 7,500 metric tons of biofertilizer on an annual basis. The resulting biofertilizer will be sold to farmers and the RNG is set to be sold at a fixed rate per (GJ) under a 20-year off-take agreement. As part of financing the project, the company will utilize a mix of equity from various partners, non-recourse debt and a potential grant with Québec’s PTMOBC program. Xebec as already filed an application with the government of Québec in regard to the potential grant, and we believe that this could be a significant development that could act as a catalyst if XBC is successful in obtaining a grant from the provincial government. The CEO of Bähler Biogaz Inc. Mr. Claude-Bernard Levesque was quoted “We are proud to team up with a strategic partner like Xebec to build this state-of-the-art industrial facility and lead the market for a true total life cycle solution for waste valorization.”. This facility should benefit the province in a big way as organic waste will be diverted from landfills and will make a clean energy source and create biofertilizer for the farmers of the province. This facility will also displace fossil natural gas which would have a positive impact on the carbon output.
In an operational update dated March 16th 2020, Xebec has had to shut down one of its facilities in Shanghai for three weeks due to the coronavirus and the company expects that this may have a slight effect on the companies Q1 of 2020, however it doesn’t expect that it will affect the company’s full year revenue. Additionally, XBC has operations in Italy which have also been slightly affected due to the mandatory lockdown of the country and the company is seeing delays from suppliers located in Northern Italy due to the lockdown. XBC anticipates that operations will resume on two projects located in Sicily and Genova around April 3rd, 2020. Operations should return to normal in the near term as the threat of Covid-19 start to diminish.
Shares of XBC has also suffered the same fate that many others have during this dramatic retraction of the market. Shares of XBC rallied 130% from $1.45 in late October to reaching a high of $4.67 on February 19th, 2020. Since the market turmoil shares of XBC have decreased by 56.5% from the high’s in mid-February. According to TipRanks.com, XBC has an analyst rating of a Strong Buy with the average price target of $5.38 and the highest forecast is targeted at $7.00 per share.
Investors looking to take advantage of the recent sell offs in the market and are seeking to diversify their portfolio, green technology may be a sector you won’t want to overlook!
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