"Steady as she goes" is how I interpret this. Some winners, some losers, but overall the long term strategy is definitely not broken. Here's my key takeaways:
•Beaware of operational risks. DEL has announced that $7.6m BlueLake Mining bioenergy plant in SA is undergoing final commissioning. Lookingback, it has taken around 2.5yrs for completion – while they advertisegenerally 1.5-2yrs. Similarly with theirNZ project, takes a bit longer than expected, so factor this in. •Cleantech (their retailer) is performing well above expectations with 18% revenue growth, expansion into east coast, and some new major clients. Potential for new M&A here to expand footprint, support EV uptake, and potential hydrogen market. •Monitoring energy costs. As Cleantech also buys third party energy, themovements in wholesale prices impacts them. InFY21 they had additional $567k in WA costs that diminish the margins. This is something to keep an eye on.. •Eastcoast is set to take off. Twoconstructions started (DEVO, DESAO) that should come online in FY23. Their retailer CleanTechstarting to sign up customers. These arereally positivesigns. •Pipeline remains strong. Known projects in the pipeline (DEVT, DEQO) expecting FID in mid-2022, and so notunreasonable to expect operations in FY25 as per conservative estimates fromprospectus and my initial modelling. Their new financial partners is going to be crucial to this, as that remains the limiting factor. •Positive environment. Getting$5.3m ARENA funding for their DESAO plant would be a further indicator of beingin the right market niche. Expanding into municipal waste for energy would be a game changer. •Financialsare strong, but not as strong as a good prospectus! I modelled $2.7m EBITDA for FY21 vsprospectus of $3.8m, and the actual is coming in at $3.0m underlying and $2.74statutory. I’m OK with that. I’m not OK that part of the reason for thisis shareholder dilution via “adjusted share-based incentive payments”!
GLTAH. My research is published on twitter for those interested (ValueDownunder).
DEL Price at posting:
23.0¢ Sentiment: Buy Disclosure: Not Held
