Canaccord has initiated coverage of Carmanah
INITIATING COVERAGE
CARMANAH TECHNOLOGIES CORP. (CMH : TSX-V : C$0.96) – BUY - 12-MONTH TARGET
PRICE: C$1.25
Sara Elford, CFA/
Comment: Initiating coverage of Carmanah Technologies with a BUY and a
$1.25 target price
Carmanah is an emerging growth company that integrates LEDs, solar panels
and rechargeable batteries into a patented unitized lighting solution.
Carmanah’s lighting solutions annual costs are 85-95% less than
conventional products. We expect Carmanah to deliver impressive sales
growth over the next few years – from $6.5 million in 2002 to $25.0
million by 2005 (CAGR of 57%). At the same time, we expect its net margin
to move from roughly breakeven in 2002 and 2003 to a steady state of 9.9%
by 2005 and beyond. Using a P/E multiple of approximately 20 times (a PEG
ratio of 0.20) our 2004 estimate of $0.06, we are initiating coverage of
Carmanah with a BUY rating and a one-year target price of $1.25 – 30%
above the recent close. In our view, this is a microcap story that offers
risk-tolerant investors a high probability of success at a still
reasonable valuation.
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