Inspirit Energy - Initiation of Coverage. Conviction Buy.

​Inspirit Energy (INSP) is a Sheffield based developer of micro Combined Heat and Power (mCHP) boilers which produce both useful heat and electricity at the same time from an energy source. The technology has a number of benefits including lowering utility bills for customers and significantly lowering carbon dioxide emissions.The Inspirit Charger to be launched shortly

Since coming to market in 2013 via a reverse takeover, Inspirit has spent c.£4.5 million on developing its flagship product - the Inspirit Charger. Trials of the appliance have shown the Charger can generate simultaneous output of 15kW thermal (heat) and up to 3kW electrical per hour. With field trials imminent the Charger is shortly set to be launched commercially.

• Benefits give the potential to become the UK’s leading mCHP product

With the price of electricity typically being 4 to 5 times the price of gas, substantial savings can be made on utility bills from using the Charger, even without the benefit of Feed in Tariffs. The Charger has a number of other benefits for customers including a fast payback period, easy installation and low maintenance costs.

• Current valuation looks cheap based on several metrics

While Inspirit remains a highly speculative investment we believe the shares now offer a good risk/reward opportunity at the current price of 0.41p. The shares currently trade at a discount to the 2013 reverse takeover price and a substantial discount to the re-creation cost of the product and technology. Should the company meet even our lowest fair value price we see 49% upside from current levels. We initiate coverage of Inspirit Energy with a Conviction Buy stance.

IMPORTANT DISCLAIMER: Inspirit Energy is a research client of Align Research. Align Research owns shares in Inspirit Energy. A Director of Align Research holds a personal interest in Inspirit Energy. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered as independent research. For the full risk warning please refer to the final page of the document.