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EQTEC - Operations & Valuation Update

• March trading update confirms growth of commercial opportunities

  EQTEC has experienced considerable growth in its non-contracted project pipeline since September 2020. The number of opportunities has grown from 41 to 75, up 83% over six months. Additionally, between July 2020 and February 2021, non-contracted tender opportunities worth a total potential of €316 million were added for a total potential pipeline value of €657 million.

• Maiden EBITDA profits expected this year with further growth in 2022/23

  For 2021 EQTEC is targeting considerable, contracted sales growth from 6 – 8 projects across Europe, including new technology collaborations. This includes the RDF plant at Billingham in the UK, the company’s largest project, valued at over €30 million in sales to EQTEC over the construction phase of the project. Revenues for 2021 from existing, inflight projects, from new projects and from gradual growth in maintenance and consulting contracts, are forecast to drive positive annual EBITDA for the first time. Further growth is forecast for 2022 and 2023 based on the breadth and variety of deals in the pipeline.

• Forecasts revised to consider enlarged pipeline and project delays

  Given the increase in the pipeline, offset by certain project delays, we have revised our forecasts. While our 2021 numbers have been revised down, our 2022 EBITDA expectations are broadly similar, edging up by €0.1 million to €10.9 million. We introduce 2023 forecasts, expecting the substantial non-contracted pipeline to translate into commercial success, with revenues more than doubling to €118.5 million and EBITDA growing by 116% to €23.5 million.

• Blended EV/EBITDA & peer valuation suggests upside of 43%

  For our target price we choose a blended valuation comprising of 50% of our EV/EBITDA valuation and 50% of our peer comparable valuation. This gives a figure of 3.115p per share. We therefore update coverage of EQTEC with a target price of 3.115p and a stance of Conviction Buy.