EnerDynamic Hybrid Technologies (EHT.V) offers a number of products which combines solar, wind, and battery storage for pre-fabricated housing among others. Since we initiated coverage, there has been a number of developments which we think investors should be aware of.
EHT.V has been aggressively targeting opportunities in West Africa (i.e. Ghana and Ivory Coast) and part of the reasons is related to the addressable market. According to International Renewable Energy Agency more than 327 Million people live in West Africa and only 47% have access to electricity.
Ghana
The company has been involved with two commercial entities: Groupe Nduom and Tri-Dovehall Ghana Limited.
In less than three months with Groupe Nduom, EHT.V went from a Memorandum of Understanding (MOU) on April 3, 2017 to a Joint Venture (JV) agreement on June 6, 2017. Under the JV, both entities committed to building a manufacturing facility in Accra, Ghana to facilitate production and distribution of EHT.V's ENERTEC modular building systems by September 2017. Initially the goal was to jointly produce two prototype units and to seek jointly opportunities in Ghana and West Africa. Since then, Groupe Nduom Power ordered 100 solar systems ($0.5M revenue) with future plans for up to 10,000 similar systems. In addition, an order of 1,000kw solar energy system from FreshPak Ghana (a subsidiary of Groupe Nduom) was reported on July 18th. This project is expected to report more than $2M in revenue for EHT.V with a completion date of January 2018,
With Tri-Dovehall Ghana Limited an initial agreement to supply up to 2,000 housing units with a potential for an additional 3,000 units (1, 2 and 3-bedroom) for police, security, and other government workers has been in the works since February 2, 2017. However, as of July 13, the Government of Ghana was still reviewing the project which is reported by EHT.V to be in the final stages of approval.
Ivory Coast
Back in October 27, 2016, EHT.V reported shipping, two models of its Advanced Modular Housing Systems. In December 2016, a letter of intent (LOI) for 50,000 homes was signed and subsequently the assembly of the Enertec Home were completed by January 31, 2017, However, as of June 13, 2017, EHT.V reported that it is still awaiting certification of the modular buildings by the local authorities.
Canada's First Nations
Through a partnership with Northern Shield Housing Development Corporation on December 21, 2016, EHT.V initiated developing solutions for Canada's First Nations. Recently, EHT.V reported being in the midst of completing a facility at Brunswick House First Nation featuring its ENERTEC wall panels and roof. EHT.V intends to leverage this efforts for future work with other First Nations communities.
Medical Marijuana Industry
On February 6, EHT.V announced a letter of intent with Georgian Bay BioMed to build a medical marijuana facility. On June 8, the company finalized the agreement and reported to be expecting $1.8M in revenue. Construction is slated to start at the end of 2017 or beginning of 2018.
EHT.V also plans on leveraging this effort to seek other contracts in the Medical Marijuana Industry.
Looking only at EHT.V's current core initiatives and expected revenues, we believe that the company is on target to trade at or above $0.15 by the end of 2017. The execution of EHT.V's strategy in West Africa, particularly getting a manufacturing facility in Ghana can be a key catalyst for further growth.
Moreover, recently reported FY17 Q2 earnings for the period ending May 31, 2017 were positive. The company reported revenue of $709K versus $262K for 2016. Not only did margins improve for the period but the general and administrative expenses were also down to $471K from $590K in Q2 2016.
EHT.V granted stock options at $0.15 (June 9) and raised $1.23M at $0.15 cents with warrant at $0.20 cents (March 8).
Hence, at the current price of $0.105, we believe that EHT.V is undervalued.
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