Solar is back. This 10-year chart of the Invesco Solar ETF (TAN) of solar-based stocks shows the surge in price and volume. This pull-back in the sector provides a buying opportunity.
Greenbriar is filing a form 20-F to the SEC for a NASDAQ listing. This is a sample of junior NASDAQ-listed solar companies and one on the OTC. They all spiked up in price around the same time the TAN ETF did above and have now settled back considerably with the recent market correction.
Sunworks NASDAQ:SUNW
- Recent price $2.60, Recent high $25
- Annual revenue US$37.9M
- Market Cap $75.6M
Solar Integrated Roofing OTC:SIRC
- Recent Price $0.43, Recent high $3
- Annual revenue US$17.0M
- Market Cap $72.2M
Spi Energy NASDAQ:SPI
- Recent Price US$3.62, Recent high $15
- Annual revenue US$97.8M
- Market Cap 81.6M
VioPower NASDAQ:VVPR
- Recent Price $2.62, Recent high $18
- Annual revenue US$40M
- Market Cap US$48.5 M
I first bought Greenbriar, mostly because of their Montavla project in Puerto Rico. However, the speed at which politics moves there is probably slower than any U.S. State. I expect this will come to fruition this year with a final Power Purchase Agreement signed, but Montavla has dropped to third position among Greenbriar's assets that will positively affect the stock first, before Montavla during this year.
Greenbriar Capital TSXV:GBR OTC:GEBRF
- Shares outstanding – 29 million, approximately
- Insiders own 21%
- Market Cap US$30M (less Captiva, CSE:PWR share value)
In no way I am down playing Montavla as it is the largest solar/battery project in the Caribbean and will replace the highest cost and dirtiest energy in North America. The realized power price for Montavla is about 400% higher than the US mainland and the project area has the highest solar radiation in Puerto Rico. There is also an existing 115 kV PREPA transmission line across the property.
If it wasn't enough that hurricane Maria destroyed infrastructure, including the electrical grid in 2017, an earthquake destroyed their largest power plant in 2020.
Montavla will be very very lucrative to Greenbriar and its shareholders, but solar projects in Alberta, Canada will start construction before Montavla.
Greenbriar has executed a long-term solar energy supply agreement with West Lake Energy, a privately owned oil and gas company based in Calgary. Under the agreement, Greenbriar will build, own and operate 90 megawatts of solar power and West Lake will purchase all of it.
Many oil and gas companies, especially the seniors, are doing similar type things with green energy projects so they can offset their carbon foot print and be perceived as good corporate citizens. As for solar in Canada, Alberta has the best solar radiation in the country. Next page is the electrical grid map from the Alberta Electrical Systems Operator indicating lots of grid capacity except in the Central East area.
The initial 90MW solar energy facility should have an approximate 10-year annual levelized EBITDA of CA$19,500,00 and a CAPEX of approximately CA$105 to CA$120 million. Greenbriar has engaged Nu-E Corp, a leader in renewable energy construction, to build the facility. In the longer term, Greenbriar and West Lake intend to eventually produce 400 megawatts of solar energy.
Sage Ranch, Tehachapi, California
Sage Ranch is a green/sustainable $480 million fully approved 995-unit subdivision in a prime real estate market. It is a 138-acre site located between the parallel arterial roads of Valley Boulevard and Pinon Street near downtown Tehachapi. The site is within half a mile from the City Hall, immediately adjacent to all schools, and in close proximity to many shops, restaurants, and public spaces in the Downtown District.
Non-dilutionary bank construction financing will be provided at the project level. Further, the USDA (U.S. Department of Agriculture) and other federal agencies provide 30- to 38-year, sub-2-per-cent home purchase mortgages requiring only a 3% down payment, making the mortgage payments to assist professional families, seniors, and single occupants an affordable home ownership package that is less expensive than renting.
Greenbriar owns the 995-unit project without any debt, being one of the only projects of this size in the United States to own 995 lots, debt-free. This is in, and of itself a $120-million (U.S.) to $150-million (U.S.) net value to Greenbriar.
Sage Ranch has engaged Paul Morris of Forward Living Keller Williams to lead the sales effort. You should watch this video, with California real estate expert Paul Morris. Buyers are anticipated to come from the large sophisticated population of engineers and skilled tradesmen related to the aeronautical and high tech engineering involvements in the Mojave and Kern County Area. Northrup Grumman, Tesla, Space X, Edwards Air Force Base, NASA, and numerous other engineering affiliations all have regional involvements with high paid and affluent employees.
All Single-Family homes will have PV roof panels with attached homes having shared panels. Water consumption will be reduced for parks and open spaces with reclaimed water connections.
You can view the Final Master Development Plan at this link for further detail.
Financial
Last financial statements at Sept. 30, 2021, show cash of $45,747. Since then, Greenbriar closed a $495,000 financing at $1.65 per unit on Nov. 8, 2021. Neither of the companies three current projects require any equity financing. They will all be financed with debt at the project level.
Summary
The unique aspect that Greenbriar's projects can be developed without equity financing gives large leverage for investors buying the stock. The company is moving from a development company to a revenue-generating one and this segment in a stock's life cycle usually produces large gains. Any one of their three projects will generate enough revenue to propel the stock much more higher than the current price.
Greenbriar has the management to get the job done and they have the incentive with 21% share ownership. Jeff Ciachurski, chief executive officer, was a founder and CEO of Western Wind, which sold for $420 million in 2013. Cliff Webb, president, is a professional engineer with 40 years of power engineering experience directly applicable to regulatory, EPC, and financing renewable energy development. Devon Sanford, president of Greenbriar Alberta, is a leading electrical contractor knowledgeable in design/construction of electrical power distribution systems including utility scale solar systems. Paul Morris, CEO of Sage Ranch, was in the video previous. Dan Kunz, chairman, was the former CEO of US Geothermal Inc., which constructed and operated three geothermal power plants in the U.S. Previous to that, he was president of Ivanhoe Mines, in charge of building the $10 billion Oyu Tolgoi copper/gold mine in Mongolia. Check out the whole team here.
The four junior solar companies on page 1 have average annual revenue of US$48 million and an average market cap of about US$70 million. As Greenbriar's projects move into revenue generation, this year and next they should reach in excess of US$120 million in revenue per year. To move up to the average valuation to the comparable companies, it would mean a stock price 2.3 times higher. Greenbriar also owns about 36.5 million Captiva Verde, CSE:PWR shares that could add value. Currently valued at around $3 million, Captiva has the right to earn a 50% net profits interest in Sage Ranch.
I believe Greenbriar's Montavla and Sage Ranch have much higher profit margins than comparables and will warrant a higher revenue multiple. Furthermore, revenues should well exceed US$100 million above the $70 million average of comparables. It is easy to put a price target of $4.00 to $5.50 on the stock for 2022.
The chart set up is very nice with a strong base to move up from and first resistance at $2 is mild.
