Nikhil Thadani, an analyst with Mackie Research Capital Corp., reported in his Jan. 11, research note that on the previous day, the stock price of Eguana Technologies Inc. (EGT:TSX.V; EGTYF:OTCQB) jumped ~25% and closed at CA$0.21 per share following the company's announcement it will make a second volume shipment of approximately CA$1 million to Hawaii in January. This subsequent delivery is "an important milestone," for Eguana, Thadani added.
The corporation expects additional Hawaii business this year will drive revenue. "Hawaii's need for advanced power controls to manage power flow, which will be rolled out in calendar year 2018, should lead to additional orders in this market," Thadani indicated.
This year, 2018, could also "provide [the] much anticipated revenue build," Thadani speculated. "With Eguana's last reported order backlog of ~CA$8M, recent volume shipments in the past roughly two months and our positive expectations in Australia and Europe, we believe 2018 revenue could approach ~CA$8–10M, which would mark a meaningful inflection point in the company's revenue growth."
In fact, Mackie anticipates Eguana's per-quarter revenue for Q1 FY18 (December) and Q2 FY18 (March) to be in the ~CA$1–2 million range, based on the CA$2 million in recent volume shipments. "We believe Eguana exceeding quarterly revenue of ~CA$1.5M (about three years ago) could be a meaningful catalyst for the stock," Thadani said.
The company's December 2017 US$3 million loan agreement with Western Technology Investment should also foster revenue growth in 2018. It should help Eguana "secure battery container shipments (Hawaii) and provide a smooth transition to its contract manufacturer (Australia and Europe)," Thadani explained. Additionally, "Eguana will, therefore, be in position to replace the balance of prior participating debentures with a lower effective interest rate, which should save cash costs going forward."
Following the debt raise, Eguana is expected to have "~CA$2–3M in cash, ~CA$1M in receivables and inventory and ~CA$1.5M in debt with room for ~CA$2M more," Thadani noted. Cash burn as of Q1 FY18 and going forward is estimated to be lower than the previous roughly CA$1 million per quarter.
Another potential near-term share price catalyst is "positive news" from Eguana's automotive partner, which is believed to be Daimler, wrote Thadani. Such an announcement should provide "additional revenue growth visibility/conviction."
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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from Mackie Research, Eguana Technologies Inc., Update, Jan. 11, 2018
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