How will EGL generate revenue from its PFAS water remediation tech?
On September 20, 2021 EGL backer, Joshua Baker, quietly issued an insightful research note.
Baker, Senior Fund Manager at Capital H, said this: "EGL has indicated that it will likely go down the path of licensing the technology to waste management companies who are at the coal face of having to manage PFAS contaminated waste."
Baker added: "We think this model is beneficial for a company of EGL’s scale as it avoids a big spending requirement to compete with established waste management companies."
And then this: "...we think it could drive a re-rate of the share price by up to 5x in the next three years or more."
As Baker sees it, there are four key elements to revenue generation from the licensing model:
1. License fee
2. Proceeds from sale and deployment of de-contamination plant
3. Revenue from ongoing maintenance and
4. Royalties per litre processed.
EGL is soon to appoint a senior manager to lead EGL Water. The manager - along with the board - will need to make key pricing decisions.
How will they pitch any royalties? At 1c a litre, 10c? 50c? And how many millions of litres will EGL's PFAS tech process?
A correct royalty decision might transform EGL's bottom line.
EGL Price at posting:
20.5¢ Sentiment: Hold Disclosure: Held
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