In a June 9 research note, PI Financial analyst Devin Schilling reported that UGE International Ltd. (UGE:TSX.V; UGEIF:OTCQB) is rapidly gaining momentum in growing its community and commercial solar solutions backlog.
"We continue to view UGE as being well on its way to building out a long-term (high margin) recurring revenue stream through the Company's transition into a solar asset owner/operator," Schilling commented.
The latest addition to UGE's backlog, its largest solar project to date in the New York metro region, is a 1.6 megawatt (1.6 MW) rooftop system in New York that the energy company will develop, build, own and operate, Schilling noted. The financial aspects of the agreement were not disclosed, but based on a previous similar undertaking, PI Financial estimated this project could generate US$0.3–$0.4 million (US$0.3–0.4M) annually once the system is up and running, expected in mid-2022.
Schilling highlighted that once that happens, UGE's "self-financed projects are anticipated to generate recurring revenue over the entire project life (+25 years)" at independent-power-producer-level (IPP) margins, which are about 70% for larger IPPs.
This newest project in New York continues UGE's success with quickly lining up projects. Last quarter, the company's backlog encompassed 41 self-financed solar solutions, totaling about 71 MW, or $130 million in value. To date, the New York–headquartered firm has completed three such projects.
"We anticipate the bulk of this backlog being built out in [fiscal years 2022 and 2023]," Schilling wrote.
PI Financial has a Buy rating on UGE.
"With a turnaround largely complete and a strategic shift entering into the owner/operator business model behind them, we believe UGE is well positioned to benefit from the rapidly growing solar market in the years to come," Schilling concluded.
PI Financial has a CA$4.50 per share target price on UGE's stock, which is now trading around CA$1.36 per share.
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Disclosures from PI Financial, UGE International, First Look, June 9, 2021
I, Devin Schilling, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly related to the specific recommendations or views expressed in this report. I am the research analyst primarily responsible for preparing this report.
Research Disclosures for UGE International:
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