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Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Research from Water Tower Research

Equity Research Firm

Thematic (Sector/Industry)

Multiple Countries / Thematic (Sector/Industry)

This Week’s Research
Crown Electrokinetics (CRKN)

Company’s Office Building IP Portfolio Worth $94.4 Million as Assessed by a Third-Party Report
Fiscal 2022 Stub Period Results; Key Product Development and Manufacturing Plan On Track

EVmo, Inc. (YAYO)

Year-End Results Set Stage for Rapid Growth in 2022 and Beyond

Last Week’s Research
Crown Electrokinetics (CRKN)

Company Hits Another Key Milestone by Signing a Master Supply Agreement with Brandywine, a Major REIT, to Install Smart Window Inserts
4Q21 Earnings Call on March 30 at 11:00 am EDT; First Product Launch Expected in Summer 2022

Previous Research
EVmo, Inc. (YAYO)

Fireside Chat Highlights Company’s Accelerating Growth Prospects

Broadscale Acquisition Corp. (SCLE)

Voltus, Technology Platform That Connects and Monetizes Distributed Energy Resources Globally, to Hold Virtual Investor Day on March 22, 2022 at 10 am EDT

SES AI Corp. (SES)

Shareholder Letter—Confident of the Business Plan and Aiming to Achieve Key Milestones in 2022

Westport Fuel Systems Inc. (WPRT)

Recap of Fireside Chat with David Johnson, CEO Westport Fuel Systems

Aqua Metals (AQMS)

Produces First Lithium from Spent Batteries; Full Pilot on Lithium Recycling to Start in 2022

INDEX STATISTICS


ABOUT THE WTR INDEX
The WTR Sustainable Investing Index is built on 150 companies in four primary segments with multiple sub-sectors: 1. Energy Technology (including Power Generation, Hydrogen &amp; Fuel Cell, Energy Storage, and Lithium Supply Chain); 2. Modern Mobility (Advanced Motive, EV Charging, Smart Driving); 3. Industrial ClimateTech; 4. Smart Buildings. The index monitors share price performance, valuation metrics, and consensus estimates. Our weekly reports also cover industry activity and news flow.
SUMMARY

WTR Sustainable Index: During the week ended April 1, 2022 the WTR Sustainable Index outperformed the broader market, rising 5.1% W/W versus the S&amp;P 500 Index (up 0.1 %), the Russell 2000 index (up 0.7%), and the Nasdaq Composite Index (up 0.6%). Energy Technology and Modern Mobility led the outperformance last week, up 3.4% and 6.6% respectively. Other sub-sectors underperformed— Industrial ClimateTech was down 2.1% and Smart Buildings down 0.1%.
Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 26.7x vs. 22.0x for the S&amp;P 500.
Consensus estimates changes: During the week ended April 1, 2022 there were&nbsp;increases&nbsp;in 2022 revenue estimates for five companies in Energy Technology and one in Industrial ClimateTech. There were&nbsp;decreases&nbsp;in 2022 revenue estimates for two companies in Energy Technology and four in Modern Mobility. Six companies (two in Energy Technology, three in Modern Mobility, and one in Smart Buildings) saw&nbsp;increases&nbsp;in 2022 EPS estimates, while seven companies (three in Energy Technology, three in Modern Mobility, and one in Industrial ClimateTech) saw decreases in 2022 EPS estimates.

SHARE PRICE PERFORMANCE SUMMARY
Share Price Performance
XEBEF shares were up 29% following announcement of three-year strategic plan growth in sustainable gases. VIEW shares were down 34% following news of restatement of financials.




Consensus Estimates
Figures 7-8 show W/W changes in FY22 revenue and EPS estimates for selected companies in the WTR Sustainable Index. For the week ended April 1, 2022, there were six increases and six decreases in FY22 revenue estimates, and six increases and seven decreases in FY22 EPS estimates.
Figures 9-10 show the number of companies with W/W changes in consensus revenue and EPS estimates by sub-sector for FY22E.















KEY INDUSTRY AND COMPANY NEWS OF THE WEEK
Energy Technology
Climate Groups Say a Change in Coding Can Reduce Bitcoin Energy Consumption by 99%
https://www.theguardian.com/technology/2022/mar/29/bitcoin-reduce-energy-consumption-climate-groups
Bitcoin mining already uses as much energy as Sweden, according to some reports, and its booming popularity is revitalizing failing fossil fuel enterprises in the US. But all that could change with a simple switch in the way it is coded, according to a campaign launched on Tuesday. The campaign, called Change the Code Not the Climate and coordinated by Environmental Working Group, Greenpeace USA and several groups battling bitcoin mining facilities in their communities, is calling on bitcoin to change the way bitcoins are mined in order to tackle its outsized carbon footprint. The software code that bitcoin uses – known as “proof of work” – requires the use of massive computer arrays to validate and secure transactions. Proof of work is a way of checking that a miner has solved the extremely complex cryptographic puzzles needed to add to the bitcoin ledger. Rival cryptocurrency ethereum is shifting to another system – “proof of stake” – that it believes will reduce its energy use by 99%. In the proof of stake model, miners pledge their coins to verify transactions; adding inaccurate information leads to penalties. With the value and use of cryptocurrencies rising, the campaign’s organizers argue bitcoin must follow suit or find another, less energy intensive, method. “This is a big problem. In part because of where the industry stands now but also because of our concerns about its growth,” said Michael Brune, campaign director and former executive director of Sierra Club.
Construction Begins for Meta (Facebook) $90 Million Solar Project
https://pv-magazine-usa.com/2022/03/28/construction-begins-for-meta-facebook-90-million-solar-project/
Another solar project built to meet the needs of Meta (Facebook) operations is underway, with a 70MW project in Tennessee Valley Authority (TVA) territory breaking ground recently. Silicon Ranch is the project developer, a firm that has partnered with the tech giant on numerous renewable energy projects in the past. The project, called McKellar Solar Farm, was launched through TVA’s Green Invest program. The program is a platform for corporations looking to meet their environmental and climate goals by investing in renewables projects in TVA territory. Under the program, corporations typically sign a contract to purchase the project’s solar energy for 20 years. Tennessee’s own Silicon Ranch will fund, own, operate, and maintain the solar project, which has an estimated cost of $90 million. Last April, Facebook announced it supported 100% of its operations with renewable energy by the end of 2020. Now, it targets net-zero across all value chains by 2030. Over the last three years, the social media giant cut its greenhouse gas emissions by 94%, exceeding its initial 75% reduction goal.
Modern Mobility
Vietnam’s Vinfast to Build $2 Billion Electric Vehicle Factory in US
https://www.reuters.com/business/autos-transportation/vietnams-vinfast-build-2-bln-electric-vehicle-factory-us-2022-03-29/
Vietnam's automaker VinFast said on Tuesday it has signed a preliminary deal to initially invest $2 billion to build a factory in North Carolina to make electric buses, sport utility vehicles (SUVs) along with batteries for EVs. The unit of Vietnam's biggest conglomerate Vingroup (VIC.HM), said it plans to have a total investment of $4 billion in its first U.S. factory complex. Construction should begin this year as soon as the company gets necessary permits, and is expected to finish by July 2024. The plant's initial capacity will be 150,000 units per year, Vinfast said. "With a manufacturing facility right in the U.S. market, VinFast can stabilize prices and shorten product delivery time, making our EVs more accessible to customers," said Nguyen Thi Thu Thuy, Vingroup vice chair and VinFast Global CEO. VinFast has begun taking pre-orders globally for two electric SUVs with a goal to begin delivering them in the fourth quarter. U.S. President Joe Biden said the VinFast investment, which will create more than 7,000 jobs, is "the latest example of my economic strategy at work."
Biden to Invoke Defense Production Act for Electric Vehicle Battery Materials
https://www.cnbc.com/2022/03/31/biden-to-invoke-defense-production-act-for-ev-battery-materials.html
President Joe Biden will invoke the Defense Production Act to encourage domestic production of minerals required to make batteries for electric vehicles and long-term energy storage. It will also help the U.S. minimize dependence on foreign supply chains. The president’s order could help companies receive government funding for feasibility studies on projects that extract materials, including lithium, nickel, cobalt, graphite and manganese, for EV production. The Defense Production Act, established by President Harry Truman during the Cold War, allows the president to use emergency authority to prioritize the development of specific materials for national production.
Smart Buildings
Checkit Announces IoT Partnership With Norwegian Tech Company Disruptive Technologies to Integrate World’s Smallest Sensors Into Smart Buildings
https://www.cambridgenetwork.co.uk/news/checkit-announces-iot-partnership-norwegian-tech-company-disruptive-technologies-integrate
Checkit, the leader in intelligent operations technology for desk less workforces, announced that it has entered into a strategic partnership to integrate Disruptive Technologies’ sensor hardware into its intelligent operations platform. The Checkit platform enables healthcare, hospitality and retail organizations to digitize their deskless operations, and to capture and analyze data to drive continuous improvement, productivity, cost reduction and compliance. Using digital workflows and sensors, Checkit provides business leaders with real-time insight into the activity of their staff, equipment and buildings. Checkit’s partnership with Disruptive Technologies will enable the Checkit platform to harness the power of the world’s smallest wireless IoT sensors by using the data to capture critical insights about building facilities, equipment and assets. The partnership expands the scope of Checkit’s smart buildings capabilities, beginning with the roll-out of automated legionella monitoring and prevention.
Over 115 Million Smart Buildings to Deploy by 2026
https://www.smart-energy.com/industry-sectors/smart-cities/over-115-million-smart-buildings-to-deploy-by-2026/
A new study from Juniper Research has found that the number of buildings globally deploying smart building technologies will reach 115 million in 2026, from 45 million in 2022. This growth of over 150% reflects increasing demand for energy efficiency from businesses and residents alike, as energy costs spike. Juniper Research, which specializes in identifying and appraising high growth market sectors, released the prediction in their new research report.&nbsp;Non-residential smart buildings are projected to account for 90% of smart building spend globally in 2026; at a similar level to 2022. This is due to the larger economies of scale in commercial premises driving this spend, as well as the commercial focus of most smart building technologies. Global shipments of sensors used in smart buildings will exceed 1 billion annually in 2026 from 360 million in 2022; a growth of 204%. Sensors, when combined with intelligent management platforms, allow smart buildings to adapt to conditions. Elements such as lighting, heating and ventilation are thus matched to live requirements.
Industrial ClimateTech
Phenomenal News From ClimateTech Unicorn, LanzaTech
https://www.forbes.com/sites/erikkobayashisolomon/2022/03/30/phenomenal-news-from-climatetech-unicorn-lanzatech/?sh=36b947f1271f
In a paper published by a leading journal, Nature Biotechnology, LanzaTech scientists and colleagues from Northwestern University, Oak Ridge National Laboratories, and the Department of Energy’s Joint Genome Institute announced they had succeeded in engineering two new strains of C. auto that would create two additional industrial platform chemicals – acetone and isopropanol (IPA). While the ethanol-producing strain of C. auto is a naturally selected organism which enables LanzaTech to commercialize its innovative industrial process, the new acetone- and IPA-producing strains have never existed in nature. As such, this scientific feat goes way beyond simply putting a cute female tiger in a cage with a horny male lion to create a Liger. The scientists at LanzaTech spent tens of thousands of hours mapping out the genetic sequence of C. auto, figuring out which sequences did what, then finding sequences from other organisms that might be modified and incorporated into C. auto’s genome to produce the target chemicals. Imagine a horse that perspires red wine when it gallops or a chicken lays chocolate truffles. That’s the macroscopic world’s corollary of what LanzaTech scientists have done on the microscopic level. All I can say is “Wow!” The operational advantages prompted by this scientific advance are no less astounding. LanzaTech engineers have designed a bioreactor into which any of the three strains of C. auto can be dropped to produce whichever of the three target chemicals is desired. In other words, the bioreactor is like a desktop computer and the anaerobic bacteria strains are the programs that run on it.
CBRE Invests in Venture Capital Firm Fifth Wall’s Climate Tech Fund
https://www.businesswire.com/news/home/20220328005085/en/CBRE-Invests-in-Venture-Capital-Firm-Fifth-Wall%E2%80%99s-Climate-Tech-Fund
CBRE is making an investment in Fifth Wall’s Climate Technology Fund to enable the next generation of sustainability in commercial real estate. The fund will invest in technologies that will contribute to the decarbonization of the commercial real estate industry, as well as adjacent sectors, such as energy and manufacturing. As the world’s largest manager of commercial buildings, CBRE is well positioned to help stem the rise in global temperatures through sustainable practices for the built environment. CBRE’s investment in the fund will provide insight into and access to early-stage technologies that will enhance the firm’s sustainability solutions for clients and support the company’s own sustainability goals.
WTR SUSTAINABLE INDEX CONSTITUENTS
Figure 20: Energy Technology Comp Table


Source: Thomson Reuters
Figure 21: Modern Mobility Comp Table


Source: Thomson Reuters
Figure 22: Industrial ClimateTech Comp Table

Source: Thomson Reuters
Figure 23: Industrial Cleantech Comp Table

Source: Thomson Reuters
DISCLOSURES
Water Tower Research (“WTR”) is a professional publisher of investment research reports on public companies and, to a lesser extent, private firms (“the Companies”). WTR provides investor-focused content and digital distribution strategies designed to help companies communicate with investors.  WTR is not a registered investment adviser or a broker/dealer nor does WTR provide investment banking services. WTR operates as an exempt investment adviser under the so called “publishers’ exemption” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940. WTR does not provide investment ratings / recommendations or price targets on the companies it reports on. Readers are advised that the research reports are published and provided solely for informational purposes and should not be construed as an offer to sell or the solicitation of an offer to buy securities or the rendering of investment advice. The information provided in this report should not be construed in any manner whatsoever as personalized advice. All users and readers of WTR’s reports are cautioned to consult their own independent financial, tax and legal advisors prior to purchasing or selling securities.  Shawn Severson, who is the writer of this report, covers the BioEconomy, Emerging Growth &amp; Special Situations and ClimateTech &amp; Sustainable Investing sectors for WTR. Mr. Severson and members of his household have no personal or business-related relationship to the subject company other than providing digital content and any ancillary services WTR may offer.  Unless otherwise indicated, WTR intends to provide continuing coverage of the covered companies. WTR will notify its readers through website postings or other appropriate means if WTR determines to terminate coverage of any of the companies covered.  WTR is being compensated for its research by the company which is the subject of this report. WTR receives no more than a maximum of $10,500 per month from a given client and is required to have at least a 6-month commitment. None of the earned fees are contingent on, and WTR’s client agreements are not cancellable for the content of its reports. WTR does not accept any compensation in the form of warrants or stock options or other equity instruments that could increase in value based on positive coverage in its reports.  WTR or an affiliate may seek to receive compensation for non-research services to covered companies, such as charges for presenting at sponsored investor conferences, distributing press releases, advising on investor relations and broader corporate communications and public relations strategies as well as performing certain other related services (“Ancillary Services”). The companies that WTR covers in our research are not required to purchase or use Ancillary Services that WTR or an affiliate might offer to clients.  The manner of WTR’s research compensation and Ancillary Services to covered companies raise actual and perceived conflicts of interest. WTR is committed to manage those conflicts to protect its reputation and the objectivity of employees/analysts by adhering to strictly-written compliance guidelines.  The views and analyses included in our research reports are based on current public information that we consider to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness, timeliness, or correctness. Neither we nor our analysts, directors, officers, employees, representatives, independent contractors, agents or affiliate shall be liable for any omissions, errors or inaccuracies, regardless of cause, foreseeability or the lack of timeliness of, or any delay or interruptions in the transmission of our reports to content users. This lack of liability extends to direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, losses, lost income, lost profit or opportunity costs.  All investment information contained herein should be independently verified by the reader or user of this report. For additional information, all readers of this report are encouraged to visit WTR’s website www.watertowerresearch.com.

Weekly Sustainable Investing Surveyor: Week Ended April 1, 2022