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#SAE
I thought I'd make a thread on my newest core holding, Simec Atlantis Energy.
After selling Eqtec #EQT, I felt the need to keep a significant % of my portfolio in green energy, given the regulatory momentum behind it.
I thought I'd make a thread on my newest core holding, Simec Atlantis Energy.
After selling Eqtec #EQT, I felt the need to keep a significant % of my portfolio in green energy, given the regulatory momentum behind it.
However many green stocks have risen beyond fair value IMO, and finding one with both immense potential that was not unfairly valued was a significant challenge.
#SAE had both.
#SAE had both.
#SAE is a 'global developer of renewable and sustainable energy projects with more than 1000 megawatts of power projects in various stages of development.'
I think of it as being active across the present and future of renewable energy.
I think of it as being active across the present and future of renewable energy.
The business which gets the most focus is their power station repurposing.
Essentially, in a 50/50 partnership with Dutch firm N+P, #SAE are using pellets made out of N+P's patented 'Subcoal' as an alternative to traditional coal in power stations.
Essentially, in a 50/50 partnership with Dutch firm N+P, #SAE are using pellets made out of N+P's patented 'Subcoal' as an alternative to traditional coal in power stations.
Subcoal is made up of plastic (that would otherwise go to landfill) and paper/card.
This enables both gate fees for waste disposal and fees for the electricity generated.
This enables both gate fees for waste disposal and fees for the electricity generated.
According to broker Arden, 'fuel pellets used at Uskmouth Power Station ( #SAE's flagship project) will equate to approximately 5 GJ/£ spent, compared to coal at c. 0.38GJ/£ and biomass wood pellets at c. 0.18GJ/£.'
Subcoal fuel generates electricity more cheaply than coal, and with 60% less greenhouse gases.
#SAE expect Uskmouth to generate 220 MW of power per annum, generating EBITDA of £70m. At a 10x PE, that is £700m versus the entire company's c. £100m mcap right now.
#SAE expect Uskmouth to generate 220 MW of power per annum, generating EBITDA of £70m. At a 10x PE, that is £700m versus the entire company's c. £100m mcap right now.
This technology is needed because solar power, wind power and tidal power do not provide the base level of electricity that is needed to keep homes and businesses running with a stable source of electricity.
This is why repurposing coal-fired power stations is a fantastic interim solution (IMO).
With the N+P partnership, #SAE may not just power Uskmouth but also a percentage of the c. 2500 coal-fired power stations in the world today.
With the N+P partnership, #SAE may not just power Uskmouth but also a percentage of the c. 2500 coal-fired power stations in the world today.
The total addressable market is enormous, and #SAE are at the forefront.
Their second business is very much one for the future.
Their second business is very much one for the future.
#SAE are market leading in tidal energy.
The MeyGen project in Scotland is crucial for both developing an independent energy source in Scotland and also to prove that tidal can be commercialised at low cost. It utilises one of the fastest water flows in the UK.
The MeyGen project in Scotland is crucial for both developing an independent energy source in Scotland and also to prove that tidal can be commercialised at low cost. It utilises one of the fastest water flows in the UK.
It is projected by Arden at c. 90 MW energy produced in 2026, generating c. £30m EBITDA by this time. That, at 10x PE, is a mcap of £300m.
However I think that the real value driver is #SAE's patents, data and expertise within tidal energy.
However I think that the real value driver is #SAE's patents, data and expertise within tidal energy.
#SAE unveiled in 2018 the 'World’s Largest Single Rotor Tidal Turbine, the AR2000'.
They also have partnerships with industry giants like GE to, among others things, develop the ability to produce energy from tidal at scale.
They also have partnerships with industry giants like GE to, among others things, develop the ability to produce energy from tidal at scale.
A suite of patents protects their tidal technology and #SAE's knowhow and market position, largely developed through their MeyGen project, is IMO going to make them a one-stop-shop for all things tidal as it inches closer to commercialisation.
By 2026 then, based on Arden forecasts £1bn does not seem unrealistic in terms of mcap.
In my view, however, the mcap can and probably will rise substantially higher.
Broker forecasts only include Uskmouth and MeyGen as sources of #SAE cashflow.
In my view, however, the mcap can and probably will rise substantially higher.
Broker forecasts only include Uskmouth and MeyGen as sources of #SAE cashflow.
I feel that they will expand their repurposing programme beyond Uskmouth, and license/provide the tech for tidal applications across the world.
This paves the route for #SAE, in the long run, to be a company worth not £1bn but in the billions of pounds.
This paves the route for #SAE, in the long run, to be a company worth not £1bn but in the billions of pounds.
The shareholder register is equally impressive as the overall business, with key names including:
Morgan Stanley 6.71%
Janus Henderson Group plc 6.68%
Canaccord Genuity Group Inc 5.13%
Amati Global Partners 4.22%
Premier Miton Group 3.89%
Herald Investment Mgt 3.34%
Morgan Stanley 6.71%
Janus Henderson Group plc 6.68%
Canaccord Genuity Group Inc 5.13%
Amati Global Partners 4.22%
Premier Miton Group 3.89%
Herald Investment Mgt 3.34%
Clearly #SAE have both the institutional backing and the industry-leading parternships, technology and knowhow to be the long-term market leader in power station repurposing and tidal energy.
I am sure (despite the probable need for dilution) that the share price can rerate to multiples of where it currently is.
To me, both of #SAE's core businesses are worth more than the current c. £100m mcap, so I am cautiously optimistic.
Would love to hear thoughts.
To me, both of #SAE's core businesses are worth more than the current c. £100m mcap, so I am cautiously optimistic.
Would love to hear thoughts.
