Research from Atrium Research, Atrium Research Corporation

Atrium Research

Research from Atrium Research

Atrium Research Corporation

Atrium Research provides institutional quality issuer paid research on public equities in North America. Our investment philosophy takes a 3-5 year view on equities currently being overlooked by the market. Our research process emphasizes understanding the key performance metrics for each specific company, trustworthy management teams, unit economics, and an in-depth valuation analysis. 

Our research product includes in-depth initiation reports, research notes, thematic research pieces, and company fact sheets.

Equity Bottom-Up

<ul>
<li>BQE reported Q1 financial results yesterday where the highlight was 114% YoY growth in its recurring operation services segment.</li>
<li>Technical services revenue was weak however, leading to a slight miss on proportional revenue ($3.4M vs. $3.8M expected) and margins.</li>
<li>Management’s outlook remained bullish, expecting operation services revenue continuing to grow rapidly and technical services revenue catch back up in H2.</li>
</ul>


BQE reported Q1 financial results yesterday where the highlight was 114% YoY growth in its recurring operation services segment.
Technical services revenue was weak however, leading to a slight miss on proportional revenue ($3.4M vs. $3.8M expected) and margins.
Management’s outlook remained bullish, expecting operation services revenue continuing to grow rapidly and technical services revenue catch back up in H2.


BQE: Decent Q1 Financials; Recurring Revenue Up 114% YoY

<ul>
<li>BQE’s recurring revenue is growing as a percentage of total revenue, making its business more predictable and stable.</li>
<li>The Company has major tailwinds from increasing environmental regulations on water discharge as well as increasing mining capex.</li>
<li>BQE’s EBITDA margins have been steadily improving over the past five years due to its asset-light model, reaching 22% in 2023E. </li>
</ul>


BQE’s recurring revenue is growing as a percentage of total revenue, making its business more predictable and stable.
The Company has major tailwinds from increasing environmental regulations on water discharge as well as increasing mining capex.
BQE’s EBITDA margins have been steadily improving over the past five years due to its asset-light model, reaching 22% in 2023E. 


BQE: Profitable & Growing Micro-Cap in the Water Treatment Industry

<ul>
<li>BQE reported Q4 &amp; 2023 financial results yesterday that came in largely ahead of our expectations on revenue.</li>
<li>Proportional revenue was $5.4M compared to our estimate of $4.2M and adjusted EBITDA was $0.5M compared to our estimate of $0.6M.</li>
<li>BQE remains well positioned for another record year in 2024, we are expecting 8% revenue growth and 36% EBITDA growth.</li>
</ul>


BQE reported Q4 &amp; 2023 financial results yesterday that came in largely ahead of our expectations on revenue.
Proportional revenue was $5.4M compared to our estimate of $4.2M and adjusted EBITDA was $0.5M compared to our estimate of $0.6M.
BQE remains well positioned for another record year in 2024, we are expecting 8% revenue growth and 36% EBITDA growth.


BQE: Excellent Q4 Financials; Increasing Target Price

<ul>
<li>BQE will be reporting Q4 &amp; 2023 financial results in ~2 weeks, we are expecting proportional revenue of $4.2M, gross margin of 45%, and adj. EBITDA of $0.6M (14% margin).</li>
<li>Metals prices have been rising steadily over the last month with copper up 9%.</li>
<li>BQE’s China JV has leverage to the copper price as it sells recovered metals.</li>
</ul>


BQE will be reporting Q4 &amp; 2023 financial results in ~2 weeks, we are expecting proportional revenue of $4.2M, gross margin of 45%, and adj. EBITDA of $0.6M (14% margin).
Metals prices have been rising steadily over the last month with copper up 9%.
BQE’s China JV has leverage to the copper price as it sells recovered metals.


Thematic (Sector/Industry)

<ul>
<li>Since our last note in November, there have been 9 more acquisitions in Canadian small-caps, all at significant premiums.</li>
<li>In this report, we analyze how the 9 newly acquired firms fit into our 6-part framework for identifying takeout candidates.</li>
<li>Our potential takeouts watchlist was up 22% vs. the TSX up 14% and XCS up 15% since November.</li>
</ul>


Since our last note in November, there have been 9 more acquisitions in Canadian small-caps, all at significant premiums.
In this report, we analyze how the 9 newly acquired firms fit into our 6-part framework for identifying takeout candidates.
Our potential takeouts watchlist was up 22% vs. the TSX up 14% and XCS up 15% since November.


Finding the Next Takeout in Canadian Small-Caps - Part Two

Canada

Transcontinental Inc. is a commercial printer of flyers, direct marketing products, books, newspapers, magazines, catalogs, and directories.  The Company is also involved in door-to-door distribution of advertising material. Transcontinental has employees in Canada, the United States, and Mexico.

Belgravia Hartford Capital Inc. operates as an investment company. The Company invests in healthcare, technology, resources, and medical sectors, as well as offers asset management and advisory services. Belgravia Hartford Capital serves customers in Canada.

Boyd Group Services Inc. operates collision repair centers. The Company offers automotive collision, glass repair, and replacement services for commercial and passenger vehicles. Boyd Group Services serves customers in Canada and the United States.

Westport Fuel Systems Inc. produces natural gas engines and fuel system components for on and off-highway commercial vehicles, as well as passenger automobiles. Westport is commercializing high pressure direct injection (HPDI) combustion technology.

Chorus Aviation, Inc. operates a regional airline.  The Company offers scheduled air passenger services on behalf of Air Canada to destinations in Canada and the United States.

Magellan Aerospace Corporation supplies products and services to commercial and defense aircraft manufacturers and operators worldwide.  The Company also provides repair and overhaul services, as well as manufactures components and sub-systems, specifically radar, sonar and satellite structures.  Magellan designs and develops aircraft structures, engines and advanced energy systems.

Aecon Group Inc. is a construction and infrastructure development company that provides services to private and public sector clients.  The Company conducts operations throughout Canada and internationally.  Aecon provides services such as development and project financing, design and engineering, procurement and construction, and operation and facility management.

Badger Infrastructure Solution provides non-destructive excavating services. The Company offers lateral inspection, smoke and deflection testing, laser profiling, concrete removal, and flushing and cleaning services. Badger Infrastructure Solution works for contractors and facility owners in the utility, transportation, engineering, construction, and petroleum industries.

AG Growth International, Inc., manufactures portable and stationary grain handling, storage and conditioning equipment. The Company's products include augers, belt conveyors, grain storage bins, grain handling accessories, and grain aeration equipment.

Ballard Power Systems Inc. designs, develops, manufactures, sells and service hydrogen fuel cells for a range of applications. The Company's products and services are used in many industries such as materials handling, residential cogeneration, backup power and transportation.

Damansara Realty Berhad is an investment holding company. Through its subsidiaries, the Company provides property development, construction, and property holding. Damansara Realty also provides quarrying.

Choice Development Inc. operates in commercial printing, package printing, and periodicals printing business.  Through its subsidiaries, the Company also sells books, audio and multimedia publication, computer products, and application software.

KOKEN LTD. manufactures gas and dust masks.  The Company also produces and installs sanitary equipment including water treatment systems and sterilizing machines for medical use.  Koken supplies masks to the chemical, automobile, steel, nuclear, and semiconductor industries, as well as to emergency services such as the Self-Defense Agency.

EF-ON INC. provides energy management services. The Company helps to plan and establish more efficient utilization of energy consumption for its client companies.  The First Energy Service develops and builds low-pollution power stations and also markets energy trading.

Bai Sha Technology Company Ltd. prints cards, calendars, advertising materials, and offers related printing services.

HARIMA B.STEM CORPORATION operates facility cleaning, maintenance, and security businesses mainly in the Tokyo area.  The Company also provides environment sanitation, hotel, and apartment management.

Krungdhep Sophon Public Company Limited provides storage and warehousing services.  The Company also invests in listed securities and, through its subsidiary, provides document storage and document management services.

KAWANISHI WAREHOUSE CO., LTD. operates warehouses in the Kobe, Osaka, Nagoya, and Keihin areas.  The Company specializes in cold-storage warehousing and handles imported food-related cargo such as coffee and pork.  Kawanishi Warehouse has subsidiaries in Singapore, Thailand, and Hong Kong.

Hua Lien International (Holding) Company Limited provides supporting services to the sweetner business. The Company also engages in sugar cane growing, sugar manufacturing, and ethanol biofuel manufacturing. Hua Lien International has operations in Jamica, Benin, and the United States.

BIKEN TECHNO CORPORATION provides building maintenance services.  The Company cleans, repairs, and reforms facilities, as well as providing food production hygiene management for utensils such as in-flight meal tableware.  Biken Techno also sells water purification equipment.

BQE Water Inc. operates as a water treatment company. The Company specializes in providing wastewater treatment solutions to mining industry. BQE Water offers its services worldwide.

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BQE Water (BQE CN)

BQE: Decent Q1 Financials; Recurring Revenue Up 114% YoY

Management’s outlook remained bullish, expecting operation services revenue continuing to grow rapidly and technical services revenue catch back up...

Atrium Research

BQE: Profitable & Growing Micro-Cap in the Water Treatment Industry

BQE’s recurring revenue is growing as a percentage of total revenue, making its business more predictable and stable. The Company has major...

Atrium Research

BQE: Excellent Q4 Financials; Increasing Target Price

Proportional revenue was $5.4M compared to our estimate of $4.2M and adjusted EBITDA was $0.5M compared to our estimate of $0.6M.

Atrium Research

BQE: Q4 Financials Preview

BQE will be reporting Q4 & 2023 financial results in ~2 weeks, we are expecting proportional revenue of $4.2M, gross margin of 45%, and adj. EBITDA...

Atrium Research

Finding the Next Takeout in Canadian Small-Caps - Part Two

Since our last note in November, there have been 9 more acquisitions in Canadian small-caps, all at significant premiums.

Atrium Research

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