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Mackie Analyst Sees Supercharged Revenue Growth for Energy Storage Firm

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Energy storage manufacturer opens up global distribution channels as long-standing partner Mercedes Benz Energy endorses product.

Eguana's AC Battery Model

This spring, Eguana Technologies Inc. (EGT:TSX.V; EGTYF:OTCQB), a small-cap Canadian firm that designs and manufactures grid interactive energy storage solutions based on its proprietary power control technology, received an product endorsement from long-standing partner Mercedes Benz Energy, which has since exited residential energy storage markets to focus on its core automotive battery segment.

The company has turned this into a significant advantage. Mercedes had extensively tested Eguana's technology prior to the endorsement and, upon exiting the marketplace, Eguana recruited and hired their top sales and marketing talent. The net affect was an immediate jump in sales, as well as getting the company positioned as one of three approved equipment providers in the lucrative, subsidized South Australia market.

"We believe as quarterly revenue starts to approach and consistently exceed ~$2Ė3 million, the stock could rapidly rerate." - Nikhil Thadani, Mackie Research

With respect to Mercedes exiting the marketplace, Eguana CEO Justin Holland told Streetwise Reports, "the company received a public endorsement of our technology along with further credibility in the form of a full scale engineering report, access to Mercedes' distribution channel, and the recruitment and hiring of its sales team in Europe."

Eguana also hired Mercedes Benz Energy's director of business development for North America, Livio Filice, and within the first 100 days, Holland told Streetwise Reports, "the team brought in over $5 million in new and recurring orders. The Mercedes sales team was familiar with and has confidence in our product, so we were able to attract a very dynamic and proven team."

Prior to Mercedes Benz, Filice set up the distribution network in the United States for Sonnen, which is currently the global leader in residential stationary storage.

Eguana's system has advantages over others, Filice told Streetwise Reports. "First, the company has a very strong history in power electronics, which is the most complicated part of an energy storage system. The capabilities of our power control systems have been proven with many different battery technologies."

"Second, one of the macroeconomic trends is that electric vehicle demand has accelerated, which has created supply constraints in the stationary storage sector. Larger battery manufacturers are struggling to meet the outstanding demand. Eguana, however, has a long-standing partnership with battery giant LG Chem, which has a strong supply chain, so we have not faced supply constraints," said Filice.

"Additionally, our system, which can be installed either indoors or outdoors, is modular in design, and storage capacity can easily be expanded by adding additional batteries, which makes us unique in the industry. With other products, an entire new system needs to be added to increase capacity. This all comes at a very competitive price point."

Eguana's reach goes well beyond North America. Eguana has hired Mercedes Benz Energy's sales team for Europe, "who have the contacts and the distribution channels; we expect them to bring in European sales early in Q1 2019," Holland stated.

And in Australia, Eguana, through partnering with national distributors AC Solar Warehouse and Baywa r.e., is positioned to take advantage of South Australia's Home Battery Scheme (HBS), which, according to the South Australia state government, aims to outfit 40,000 households with Virtual Power Plan (VPP) ready integrated battery systems by providing access to a $100 million in state government subsidies to pay installations. Eguana is one of three companies whose equipment is approved for the HBS.

"Eguana looks like a strong buy here." - Technical analyst Clive Maund

"Strategically we are on track to become the dominant supplier of energy storage in South Australia," stated Brent Harris, Eguana's chief technology officer. "Our SA order book has crossed the $1.5 million mark in less than two weeks and as we establish our System Provider partner network in the market we recognize they require capable distribution partners to support their growth."

"The South Australian government's Home Battery Scheme is accelerating residential energy storage growth in the world's highest penetration rooftop solar PV market. Coupled with the government grant, consumers that purchase registered systems will also have access to CECF's A$100 million for additional financing. Eguana's Evolve residential energy storage system is ideally suited for the market with its VPP capable AC coupled format supporting backup operation with solar charging ensuring that both new and retrofit customers can get the maximum value out of their energy storage purchase," Eguana noted.

All this activity is fueling revenue growth. In FY/2016, which ended September 30, Eguana reported revenues of CA$700,000; followed by revenues of CA$800,000 in 2017. Eguana has not yet released FY/2018 revenues, but it has announced more than CA$3 million in orders during the period.

"In Q1/2019, the quarter we currently are in, our order book is approaching CA$7 million," Holland told Streetwise Reports.

Eguana has caught the attention of Mackie Research, and is covered by analyst Nikhil Thadani. Discussing Eguana's inclusion in the South Australia program, Thadani wrote on November 19, in a report titled "Australian Program Inclusion Should Supercharge Revenue Growth by Adding Exposure to Largest Demand Market," that Eguana "has been approved for both the South Australia 'Home Battery Scheme' and CEFC home battery financing providing direct access to A$100 million in subsidies and low interest loans for residential battery storage."

The "Australia news bodes well for additional order intake, following what appears to be an existing step up in orders in H2 C2018. We expect EGT's positive South Australian program inclusion could lead to additional order intake of ~$5 million in early C2019, i.e., double EGT's existing order book," Thadani stated.

"We believe as quarterly revenue starts to approach and consistently exceed ~$2Ė3 million, the stock could rapidly rerate. We're optimistic on starting to see order-revenue conversion in Q2 (Mar) F2019. 9M F2018 (Jun) revenue has been ~$4 million vs. the previous revenue high water mark of ~$6 annually in F2015 (Sept), we believe the company is approaching the revenue inflection point," Thadani concluded.

Mackie Research has a CA$0.70 target on Eguana; shares are currently trading around CA$0.18.

Technical analyst Clive Maund analyzed Eguana Technologies and wrote on December 10, "Eguana Technologies is now extraordinarily cheap considering the huge strides it is making. . .Eguana looks like a strong buy here. . .There is now considered to be a yawning gap between the company's low stock price and its rapidly improving fortunes that should be closed by the stock advancing."

Eguana has approximately 222 million shares issued and outstanding and about 245 million fully diluted. About 55% of the shares are closely held.


1) Patrice Fusillo compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an employee. 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.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Eguana Technologies. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Eguana Technologies. Please click here for more information. An affiliate of Streetwise Reports is conducting a digital media marketing campaign for this article on behalf of Eguana Technologies. Please click here for more information.
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Disclosures from Mackie Research, Eguana Technologies Inc., Management Update, November 19, 2018

Relevant disclosures required under Rule 3400 applicable to companies under coverage discussed in this research report are available on our web site at

Each analyst of Mackie Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analystís personal views and (ii) no part of the research analystís compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

Clive Maund disclosures
I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None.

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