EnerDynamic Hybrid Technologies (EHT.V) offers a number of products which combines solar, wind, and battery storage for pre-fabricated housing among others. We initiated coverage on February 17, and in our last note (August 7) we indicated that they were undervalued at $0.105 cents.
Since our the last update there has been a few development which are worth outlining.
Aug. 17 - Confirmed debenture extension; series 2.1 debentures ($13.6M) of which 60% ($8.6M) get extended to July 31, 2018.
Sep. 11 - Launches an online private placement on Stockhouse Deal Room at $0.10 with warrant at $0.15 cents for $5M.
Sep. 13 - Secures Ghana system order and provided updates Ivory Coast Project.
Ghana: supply a 1,000kw solar energy system to Fresh Pak Ghana, a subsidiary of Groupe Nduom, revenues of approximately $2M are expected from this project. Installation of the system is expected to commence in January 2018 with completion in February 2018.
Ivory Coast: Received the test results from the additional testing required.
Sep. 25 - Reduced private placement announced on Sep. 11 from $5M to $2M. Also extended the closing date to November 3, 2017.
Sep. 28 - Announced that ENERTEC panels meet the ASTM E72-15 testing guidelines and the requirements of the National Building Code of Canada. As such, EHT.V is confident that the product will meet code requirements of other jurisdictions (i.e. Ivory Coast). EHT.V also announced that they were pursuing Miami-Dade for Hurricane testing certification and are now working with Intertek in Ivory Coast.
Oct. 2 - Elected Dan Amadori and David Woolford as directors
Oct. 4 - Provided updates on the debenture extension from August 17. Now the company has 89% of the debentures extended until July 31, 2018.
In addition, the interest rate it has to pay under these terms were brought down from 18% to 8%.
Oct. 10 - Awarded contract from Northern Shield Development Corporation. A total of 3 contracts totaling over $2M in booked revenue with deposits. The projects are in Ontario and Labrador and are to be completed in spring 2018. Company reported a $5M in the pipeline.
Oct. 18 - Receives initial order from the Foundation General Akissi on behalf of the Government of Ivory Coast. EHT.V to build an initial 4,000 houses of 2 and 3-bedroom models at the cost of US $30-35K each with a 15% margins. Houses will be built over the next 3 years starting Spring 2018. Scheduled is 50 houses per month in the first 3 months, 100 houses per month (next 3 months), and 200 houses per month until completion.
Note that the initial LOI with Ivory Coast (October 2016) was for 50,000 ENERTEC homes. Hence, there is a strong possibility that upon successful completion of this initial order there could be potentially additional ones.
Synopsis
In the last three months EHT.V not only extended its debenture ($13M) date to July 31, 2018 but also reduced the associated interest rate by 10% .
In addition, the company has managed to secure a number of contracts in Ivory Coast, Ghana, and Canada.
As displayed in the chart above, the October 18th release caused the stock price to spike to $0.16. This was short-lived due to the ongoing open private placement. Because the private placement still remains open, there has been an intense selling pressure. It is believed that many sold to participate in it because of this positive news.
Now, we cannot guarantee what will happen next but we expect that the private placement to a) be re-expanded to $5M with a chance of being oversubscribed; b) the stock price to potentially spring back to around $0.14 to $0.15 cents upon its closure assuming it is favorable. Either way, we continue to be long on EHT.V as the company has made some significant improvement on increasing their sales and reducing their fiscal liabilities.
Below is the forecast for next week. We consider accumulation below $0.12 cents as sensible - we believe that there is potentially more to come.
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