Canaccord Genuity makes 'minor changes' to eEnergy Group forecasts

Canaccord Genuity stated eEnergy continued to see "highly attractive market conditions", with its core offering of energy-efficiency-as-a-service presenting no capital cost to customers, experiencing "strong demand".

However, market changes, most notably to its third-party financing arrangements and lower upfront supplier payments in its energy management business, lead to higher cash consumption in the short term - as demonstrated by the group's issue of secured bonds in November.

"We are making a number of minor changes, primarily increasing our expected profitability in energy efficiency as eEnergy's book of demand for solar projects (and to a lesser extent EV chargers) increases rapidly, offset by lower growth in its energy management business as switching diminishes in a less competitive environment. We are also removing a non-cash amortisation from our adjusted pre-tax profit and earnings per share, and taking a slightly more cautious view on near-term cash. The net impact is a small EPS upgrade but only marginal changes to our EBITDA forecasts," said Canaccord, which reiterated its 15.0p target price and 'buy' rating on the stock.

"We continue to base our price target on 7.5x June 2024E EV/EBITDA, which we believe is a fair reflection of the risks for what remains a high-growth business with a differentiated business model in a sector experiencing secular growth."

Reporting by Iain Gilbert at Sharecast.com