In the news: MYCELX Technologies


Imogen Whiteside has just put out her latest piece: MYCELX Technologies*† — 2015 Financial Results & Outlook, 19 May 2016. MYCELX offers a technologically differentiated water purification solution that has been adopted by a range of blue chip clients across the oil and gas industry, in both the upstream and downstream space. It has announced its 2015 financial results and its latest outlook. Revenue was in line with 2014 at US$13.6m, with a robust gross profit margin of 53%. The company achieved a 16% YoY reduction in SG&A, leading to an adjusted negative EBITDA of US$1.7m, with net cash at the year end standing at US$3.7m, with its line of credit balances paid off. Consistent achievement of >50% gross margins has been underpinned by high-margin lease contracts, in addition to repeat media sales.
Lease renewals in the Middle East are key to underpinning baseline revenue in the company’s core market. Revenue for the period was strongly (78%) weighted towards the Middle East, with repeat business from high-profile clients, including SABIC and affiliates, backing revenues. The MYCELX system is installed in four sites in Jubail City, Saudi Arabia, with two operating leases being extended during the year with SABIC, and a two-year extension on a further SABIC lease being signed post-period end at a value of US$5m. A plant turnaround project in Qatar in 1H15 provided a cornerstone for operational progress during the year, with the MYCELX system being particularly suited to treating the potentially high-contaminant washdown water to stringent discharge requirements within a tight timeframe.
We maintained our BUY recommendation, with a target price of 80p. We derive our target price from our base case DCF model, assuming no new contract upside in 2016, and sustained gross margins of 50-60% going forward.

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