PowerHouse Energy - Re-initiation of Coverage
PowerHouse Energy (PHE) is an AIM listed company which is pioneering waste-to-hydrogen technology via its proprietary Distributed Modular Gasification (DMG®) process.
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Revolutionary waste-to-hydrogen technology
PowerHouse’s proprietary Distributed Modular Gasification (DMG®) process can convert high calorific value waste material such as tyres and plastic into a clean Ecosynthesis© gas. This “syngas” contains a high percentage of hydrogen that can be cleaned up to 99.999% purity using off-the-shelf technology to produce a road quality hydrogen fuel. DMG allows for distributed electrical generation, distributed waste elimination, and distributed hydrogen production allowing each to be used at the point of engagement.
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Significant technical and commercial progress made
PowerHouse has been operating a process demonstration unit at the Thornton Science Park, Chester, since May 2017. A string of positive announcements have been made since then, culminating last month in the successful independent assessment of the feasibility of its Commercial Design by industry-leading technology assurance group, DNV-GL. . Powerhouse has also made significant commercial progress over the course of 2017 and 2018, including a Heads of Terms agreement with Peel Environmental to locate an initial commercial DMG® System. The Company is in late stage discussions with 6 additional potential customers at which an early DMG® System may be deployed, as well as commercial discussions with multi-national transportation providers in Japan.
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Market drivers put the company in a sweet spot
PowerHouse’s technology has the potential to solve increasing issues associated with global waste management, to take advantage of higher demand for clean “green” power generation and to supply a growing worldwide demand for road quality hydrogen fuel.
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DCF valuation suggests significant upside potential
Our DCF analysis suggests an NPV(20) of £47.4 million, or 2.45p per share, some 6 times the current share price. However, we use very conservative assumptions in our model and see significant further potential upside. We re-initiate coverage of PowerHouse Energy with a Conviction Buy stance.
Powerhouse Energy Group is engaged in the development of the PHE G3-UHt Waste-to-Energy System in order to achieve its full commercial roll-out. The system's gasification reactor converts waste materials such as non-recyclable plastic, biomass, and other waste streams into a synthesis gas composed primarily of hydrogen and carbon monoxide.
Align Research is a commissioned research company founded in November 2015 in order to provide the under-served smaller company space with high quality analysis. We have an initial focus on the natural resources sector, in which we see significant opportunities given the current once in a generation bear market, however all undervalued small caps (sub £100m) are considered by our team. Align was founded by industry professionals with decades of experience in the stock markets, headed up by highly qualified individuals from both fund management and analytical backgrounds.
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