Recent Joint Ventures Assure Tecogen Strong Continued Growth

Tecogen Inc. (TGEN – $4.52) designs, manufactures and sells industrial and commercial CHP (Combined Heat & Power), or cogeneration, systems that produce combinations of electricity, hot water, and air conditioning. Tecogen is a well-established company, as it has already shipped over 2,300 units so far, some of which have been operating for almost 25 years.

About a month ago Tecogen’s sales backlog of equipment and installations was $13.1 million. Significantly above the Company’s goal of consistent quarterly backlog of at least $10 million. Noteworthy is that the backlog does not include service contract revenues which were more than one third of the Company’s revenues in 2015.

A couple of weeks ago, Tecogen formed a 50/50 joint venture corporation with the Czech CHP manufacturer TEDOM. The JV, coined TTcogen LLC, offers a complete package of 27 different CHP modules ranging in size from 35 kW up to 4 MW. TTcogen in fact is now the premier packaged CHP provider with the widest product range available in the United States. Thanks to the much expanded offering, TTcogen is quadrupling Tecogen’s addressable market for CHP.

These are also very exciting times for Ultratek, a 50/50 joint venture, which was formed with a group of strategic investors, to test, verify and develop the Company’s Ultera near-zero emissions technology for vehicular applications. Adapting the Ultera technology to gasoline fueled engines, represents an exciting and game-changing new market for Tecogen.

Initial tests on a gasoline powered light duty vehicle conclusively proved the Ultera technology to be highly effective in reducing pollutants. Top level findings showed the cutting-edge system reduced levels of carbon monoxide emitted by as much as 90 percent, and cut non-methane hydrocarbons (NMOG) by as much as 80 percent in excess of current available technology.

Tecogen is a well-established and respected company in the industry, as it has already shipped over 2,300 cogeneration units. At the same time, the Company has a number of irons in the fire that assure its strong continued growth.

Based on the intrinsic value of Tecogen’s shares derived from our model, we reiterate our buy recommendation for Tecogen Inc. with a price target of $8.94, which is 97% above today’s stock price.

Download the first quarter 2016 Tecogen Inc. Company Report. Download Advice: BuyPrice Target: $9.41Latest Company Report (pdf)
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