Eguana Technologies Inc. (EGTYF)

[JBTYCOON1]

As posted on Stockhouse:
New report by Mackie naming Daimler

New report by Mackie naming Daimler
ACTION – Upcoming Auto Show & Investor Meetings Reinforce Conviction

Positive investor meetings suggest company gearing up for order intake from existing design wins. We hosted institutional investor meetings in Toronto on Aug 31st with EGT CEO Justin Holland and CTO, Founder, Brent Harris. The tone of meetings was positive. It appears order intake from EGT’s German automotive customer and E-Gear in Hawaii should be within grasp. We believe EGT’s cash balance of ~$5-6 mln, bolstered by proceeds from the Jun equity financing should provide the company runway of at least a year to convert design wins into revenue (cash burn ~$1 mln/qtr).

Positive German automotive news could be coming with volume orders expected in the fall. Recall, with Q3 (Jun) F2016 results reported recently, EGT signalled progress with this important customer (widely speculated to be Daimler). A transition to field trials was highlighted as first units were delivered in mid-Jun. In our Jul initiation, we highlighted that EGT entered into a development contract with a battery manufacturing subsidiary of a global German automotive company.

DETAILS – Paris Show Next Month Could Reveal Automotive Catalyst Details German carmaker, Daimler, appears to be planning large electric vehicle push. Daimler plans to roll out at least six, and possibly as many as nine, electric car models as part of its push to compete with Tesla and Volkswagen's Audi, according to Reuters on Sept 3rd

(http://reut.rs/2bKGCFS). Reuters added that Daimler remains on track to unveil a new electric car at the Paris motor show next month. In July, Daimler had accelerated development of premium electric cars. German trade magazine Automobilwoche earlier cited company sources as saying Daimler would bring to market more than six electric car models between 2018 and 2024. Reuters' also indicated

IMPACT – Re-Iterate $0.70/Sh Target, SPECULATIVE BUY

Our $0.70/sh one –year target is based on our blue-sky upside discounted back three years at 25%/yr. We are not yet introducing quarterly estimates pending additional clarity on the timing of design win-revenue translation. EGT’s design wins could support ~$57-75 mln revenue blue-sky vs. ~$1.5 mln/qtr in H1 C2015. EGT’s two most compelling revenue opportunities could scale to ~$60 mln/yr annual revenue. Recall, we have previously suggested, EGT's Hawaii revenue opportunity could be ~$3 mln/month driven by ~600 units/ month at ~$5K/unit. European automotive maker opportunity could eventually be 10-20K units annually; initially likely ~1K units/month at $2K/unit.

Stock could offer upside as investors gain comfort on design win conversion. EGT traded at ~4.5x trailing sales last summer, with revenue trending at an annual ~$6 mln/yr run-rate. Applying historical valuation (4.5x Sales) to a blue-sky ~$60 mln/yr annual revenue run-rate equates to a stock price ~$1.30-1.40/sh; all else equal, IF EGT can successfully translate design wins into revenue as management expects.