Here is the fourth instalment in our series on selected listed companies operating in the clean and green space, produced as a contribution by research and analyst company Kalkine. The series has been devised in recognition that in the absence of government mandates one of the fastest and most efficient ways to transition to a clean economy is through investments that promote a clean and healthy economy. However, as with any investment there needs to be a solid business case and a critical eye to underwrite success. The Fifth Estate makes no comment on this.
CropEnergies AG (CE2) is a European manufacturer of sustainably produced bioethanol catering to the fuel sector. The use of a highly efficient production process and a system enables CE2 to reduce carbon dioxide (CO2) emissions by up to 70 per cent across the whole value-added chain against the traditional methods based on the use of fossil fuel. The technology involves processing of raw materials into high quality protein food and animal feed products. Through this, the company manufactures about 1.3 million cubic metres of bioethanol a year from cereals and sugar beet.
Strong quarterly performance leading to a better guidance for the financial year
CropEnergies reported that its revenue grew to €215 million in the third quarter of the financial year 2016/17 against earlier year results of €168 million on the back of a restart of the production plant in Wilton, UK, which increased the bioethanol production from 618,000 to 735,000 cubic metres. As a result, CE2 revenue grew to €565 million in the nine months of the financial year 2016/17, as compared to €558 million in the corresponding period previous year.
In the third quarter, the food and animal feed volumes produced also surged. However, due to the lower proceeds for bioethanol, food and animal feed, the third quarter’s operating profit (€59 million) was slightly lower than that of the prior corresponding period (€63 million).
The earnings before interest, tax, depreciation and amortisation (EBITDA) in the third quarter is €87 as compared to €89 in the previous year. Despite these shortcomings, CE2 has upgraded its forecast for the current financial year and now expects the revenues to be between €760 million and €790 million against the earlier guidance of revenue in the range of €670 million and €720 million.
Operating profit is expected to be in the range of €70 million to €85 million against earlier guidance in the range of €50 million to €80 million. However, there are now a few concerns prevailing in the industry with regards to the climate and energy policy measures presented by the European Commission late last year. These relate to decreasing the share of biofuels obtained from crops to a maximum of 3.8 per cent in 2030 from seven per cent in 2021. Until now, CropEnergies’ stock has rallied over 40.9 per cent in the last year (as of 20 January 2017).
Aurora Solar Technologies Inc
Aurora Solar Technologies Inc (ACU) is a Canadian company that develops and markets inline measurement, visualisation and control systems for the photovoltaic manufacturing industry. The company’s shares are listed on the TSX Venture Exchange.
ACU’s technology is built on a quality control system for solar cell manufacturing. In process terms, this involves non-contacting mapping of wafer performance to optimise the diffusion process while using an ultra-high line speed measurement system, Decima. The company has lately introduced an enhanced version of its Decima inline measurement system for quality control of bifacial solar cells during production.
Quality Control System (Source: Company Reports)
Largest single order received
The company received a major order from LG Electronics for 12 Decima CDs and multiple Veritas systems and this is expected to be delivered by the end of February. As ACU has already delivered five Decima 3T units, along with this order, the booked orders for the fiscal year would be worth more than $1.5 million dollars, against the recognised revenue of $290,000 dollars for the year ending 31 March 2016. ACU also received a follow-on order last year from another recognised leader in solar cell technology. The shipped products from these two orders were successfully put into production in December 2016. Meanwhile, the group hopes for further orders from this customer for a new solar cell production facility in the first half of 2017, which is expected to amount to at least another 20 units.
The successful sale and installation of Decima and Veritas Software to leading industry players is creating new order opportunities for ACU. In the past six months, ACU has introduced its products to more than eight potential new customers, which indicates for more revenue for the company. ACU is targeting Asia, which represents more than 85 per cent of global solar cell production, by leveraging their strategic partnerships while making progress with end-to-end quality control system design. ACU stock generated returns of about 19.4 per cent in this year to date (as of 20 January 2017) but fell about 15.9 per cent in last one year.
Rivertop Renewables is a US-based renewables company catering to a multitude of markets such as home care, oil and gas, nutrition, food and beverage and the like. The company was selected as a 2016 Global Cleantech 100 “One to Watch” and identified for its ability to draw the attention of leading investors and corporates in the market.
Diverse products that are safer to use
Rivertop’s Riose detergent builder is an effective, cost-efficient, renewable and safe replacement for phosphate builders, which have now been banned for use in detergents. The company’s Waterline CI is a corrosion inhibitor developed to simplify water treatment.
Another related product developed by Rivertop is its Headwaters corrosion inhibitor, which is used to de-ice roads while protecting vehicles and highway infrastructure from corrosion.
The product is derived from natural sugars, and is biodegradable and cost-effective. In fact, Rivertop Renewables has been awarded a contract from Colorado Department of Transportation to supply bio-based corrosion inhibitor for use with liquid anti/de-icers on the state’s roads.
A couple of years earlier, Rivertop had started the commercial manufacturing of sustainable, high performing, cost-competitive and glucarate-based products along with a Virginia based company, DTI (DanChem Technologies). Rivertop and DTI planned to achieve production at nameplate capacity of 10 million pounds per year. Looking at the prospects, it will be prudent to keep an eye on this budding company.
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