EuroSite Power Growing Fast In Untapped On-Site Utility Market
EuroSite Power Inc. (EUSP – US$0.81) installs, owns, and operates Combined Heat & Power (CHP), and cooling systems at smaller industrial and commercial facilities in the United Kingdom. It provides these facilities with clean, reliable power, cooling, heat and hot water without any capital or start-up costs to the customer and at lower costs than charged by conventional energy suppliers.
The Company has developed an innovative financial solution that offers significant economic and operational benefits to properties, such as healthcare facilities, hotels, multi-family housing facilities, leisure centers, schools, and colleges.
Because EuroSite Power’s CHP systems operate at up to 90% efficiency, versus less than 33% for the existing power grid, it’s able to sell the produced energy at prices below the existing cost of electricity, heat and hot water.
In 2014, the Company’s sales increased by 88% compared with the previous year, and in the first quarter of 2015 revenues were 27% higher. With a growing number of CHP systems in operation, EuroSite Power gets closer to becoming cash flow positive. According to the management team, it needs 45 operating units to achieve that feat, while it has 36 contracts signed today, and consistently adds customers.
CHP is growing in popularity across Europe. It’s widely supported by governments as it is viewed as a key measure to reduce greenhouse gas emissions. A few weeks ago, EuroSite Power received approximately US$625,000 as a UK tax incentive.
The market for small scale CHP units (<500kW) – in which EuroSite Power specializes - is still relatively young, so there is a vast untapped opportunity in hotels, hospitals, and recreational facilities. EuroSite Power intends to expand its services to mainland Europe as soon as it has established a solid operational CHP fleet in the UK. The Company is financially backed by Dr. John and Dr. George Hatsopoulos, the founders of Thermo Electron Corporation which is now Thermo Fisher Scientific (NYSE: TMO), a US$52 billion company.
Based on the intrinsic value of EuroSite Power’s shares derived from our model, we issue a buy recommendation for the Company with a price target of US$2.09, which is 158% above today’s stock price.
|Download the first quarter 2015 EuroSite Power Company Report.|
|Smallcaps.us Advice: Buy||Price Target: $2.75||Latest Company Report (pdf)|
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