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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)

SUMMARY
Upcoming Events
Westport Fuel Systems (WPRT)

Westport Fuel Systems Inc. CEO David Johnson and VP Scott Baker to discuss Hydrogen HPDI Solution on May 20, 2022, at 11:00 am EDT

Last Week’s Research
Electrovaya, Inc. (EFL)

2Q22 Results: Revenue Surged 46.6% Y/Y; Gross Margin Declined By 6.4% Y/Y; Key Recent Developments

Gevo, Inc. (GEVO)

1Q22 Results: RNG Plant to Kickstart Revenue; Key Tie-Ups with Top Airlines to Supply SAF; Net-Zero 1 Project on Track

Previous Research
Aspen Aerogels, Inc. (ASPN)

1Q22 Results: Strong Start to 2022; Revenue Jumped 36.7% Y/Y with PyroThin Sales Already Exceeding 2021 Level

Aqua Metals, Inc. (AQMS)

1Q22 Results: Positive Momentum with Li-ion Battery Recycling; Key Metals Produced from Black Mass

Electrovaya, Inc (EFL)
Dr. Sankar Das Gupta: Electrovaya’s Disruptive Battery Technology, Strong Growth Prospects, and IP
EVMO, Inc. (YAYO)

Fireside Chat Highlights: Building Customer Demand Ahead of Fleet Growth

SES AI Corp. (SES)

Driving Ahead with Commercial Scale Proprietary Li-Metal Battery Solutions for Electric Vehicles
COO Rohit Makharia Discusses Key Milestones and Drivers behind SES’s Unique Li-Metal Technology and the Drive toward Commercialization

Crown Electrokinetics (CRKN)

Looking through the Window into Smart Glass Solutions for the Commercial Retrofit Market

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; and (4) Smart Buildings. The index monitors share price performance, valuation metrics, and consensus estimates. Our weekly reports also cover industry activity and news flow.
WTR SUSTAINABLE INVESTING COMPANY SPOTLIGHT
Westport Fuel Systems is part of the WTR Sustainable Index in the Modern Mobility sub-segment.
The company is a leading provider of market-ready transportation solutions that reduce emissions and realize fuel cost savings. The company is a tier one supplier to and has partnered with many of the leading automotive and truck OEMs around the globe.
The company’s flagship HPDI 2.0 fuel system technology is sold to major OEMs in Europe and China, and it recently unveiled its Hydrogen HPDI system, which will build on its existing partnerships around developing technology that would allow engines to run on hydrogen.
Headquartered in Vancouver, Canada, with operations in Europe, Asia, North America, and South America, the company serves customers in more than 70 countries, with leading global transportation brands. For more information, visit&nbsp;www.wfsinc.com.
Recent Events

Unveils Hydrogen HPDI fuel system for heavy-duty truck applications.&nbsp;On May 3, the company unveiled a fully functional hydrogen powered demonstrator vehicle that will be on display at an upcoming industry tradeshow. The truck uses the company’s propriety H2 HPDI fuel system that produces 20% higher power and torque than the base diesel engine at a lower cost than fuel cell vehicles or battery electric vehicles, particularly for heavy-duty, long-haul trucking. The company will continue with its existing hydrogen-related development programs with AVL/TUPY, and Scania and expects new H2 HPDI programs with other partners to come soon.
Reported 1Q22 revenue of $76.5 million&nbsp;and net income of $7.7 million which included a one-time gain. Cash position stood at $127.6 million.

WTR will be hosting a fireside chat with Westport Fuel System’s CEO David Johnson, VP, Engineering and General Manager Scott Baker&nbsp;on May 20, 2022, at 11:00 am EDT to discuss the company’s Hydrogen HPDI Solution for heavy-duty transportation.
Access is open to all. Please register&nbsp;here.

SUMMARY

WTR Sustainable Index: During the week ended May 13, 2022, the WTR Sustainable Index underperformed the broader market, falling 8.4% W/W versus the S&amp;P 500 Index (down 2.4%), the Russell 2000 index (down 2.5%), and the Nasdaq Composite Index (down 2.8%). Except Smart Buildings (up 0.5%), all sectors underperformed. Energy Technology, Modern Mobility and Industrial ClimateTech were down 11.4%, 9.9%, and 3.9%, respectively.
Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 24.6x versus 17.4x for the S&amp;P 500.
Consensus estimates changes: During the week ended May 13, 2022, there were&nbsp;increases&nbsp;in 2022 revenue estimates for three companies in Energy Technology and one in Industrial ClimateTech. There were&nbsp;decreases&nbsp;in 2022 revenue estimates for four companies in Modern Mobility and one each in Energy Technology and Smart Buildings. Nine companies (one each in Energy Technology and Smart Buildings and seven in Modern Mobility) saw&nbsp;increases&nbsp;in 2022 EPS estimates, while four companies (one in Energy Technology and three in Modern Mobility) saw decreases in 2022 EPS estimates.

SHARE PRICE PERFORMANCE SUMMARY
Share Price Performance
RIDE shares were up 28% following news of sale to Foxconn. LIQT shares were down 60% following news of public offering pricing.




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 May 13, 2022, there were four increases and six decreases in FY22 revenue estimates, and nine increases and four 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
Verbund Acquires Renewable Portfolio in Spain from Q-Energy Group
https://www.power-technology.com/news/verbund-energy-spain/
Austrian electricity provider Verbund has announced the acquisition of a renewable energy portfolio in Spain from various funds of the Q-Energy Group for an undisclosed sum. Q-Energy Private Equity, a fund manager for renewable energy investments, will manage the vendor funds. The portfolio includes regulated and operational solar farms with a total installed capacity of 82MWp, as well as a development platform comprising wind and solar projects, together with its development team. Around 2.1GW of the platform is currently in the advanced development stage, while greenfield projects account for around 2.4GW. The development team will also support Verbund’s ongoing development activities in Spain.
CBAK Energy Obtains $29 Million Battery Order from European Customer
https://www.prnewswire.com/news-releases/cbak-energy-obtains-29-million-battery-order-from-european-customer-301546959.html
CBAK Energy Technology, Inc a leading lithium-ion battery manufacturer and electric energy solution provider in China, today announced that the Company has received an order from a leading European provider of heating, cooling and renewable energy systems (the "Customer"), for a supply of lithium-ion batteries worth EUR 28.2 million ($29.3 million). Pursuant to the order, CBAK Energy will ship approximately 13.9 million units of batteries to the Customer. This will bring the total order value CBAK Energy has received from the Customer in 2022 to approximately EUR 31.2 million, for which the Company will deliver the products this year and next. The Customer has a global presence with annual sales of billions of Euros. CBAK Energy has been collaborating with the Customer since 2020. In 2022, CBAK Energy is expected to deliver 9.9 million units of batteries to the Customer for estimated EUR 17.1 million.
Modern Mobility
Allison Transmission Showcases Advanced Propulsion Technology at Modern Day Marine Expo
https://www.businesswire.com/news/home/20220509005266/en/Allison-Transmission-Showcases-Advanced-Propulsion-Technology-at-Modern-Day-Marine-Expo
Allison Transmission, a leading designer and manufacturer of conventional and electrified vehicle propulsion solutions for tactical wheeled and tracked defense vehicles as well as medium- and heavy-duty commercial vehicles, will be exhibiting its latest propulsion technology at the 2022 Modern Day Marine Expo from May 10-12, 2022, which will take place at the Walter E. Washington Convention Center in Washington, D.C. Allison Transmission propulsion solutions are featured in every major tactical wheeled vehicle platform used by the U.S. Marine Corps larger than a High Mobility Multipurpose Wheeled Vehicle (HMMWV). From the Joint Light Tactical Vehicle (JLTV) to the Medium Tactical Vehicle Replacement (MTVR) and Logistics Vehicle System Replacement (LVSR), the Marine Corps trusts the world-class reliability and performance of Allison transmissions. The Amphibious Combat Vehicle (ACV), the Corps’ next-generation vehicle designed to move Marines from ship to shore, is equipped with the powerful Allison 4800SPTM transmission designed to provide ease of operation, superior reliability and torque to take on challenging surf and complete a long swim from ship to shore.
Hyundai Confirms Plans for EV Factory in the USA
https://www.electrive.com/2022/05/10/hyundai-confirms-plans-for-ev-factory-in-the-usa/
The South Korean car company Hyundai Motor is planning to build a new plant for the production of electric cars in the USA. The company has confirmed the project in principle, but has not yet named a location. But there is apparently already a favorite. Hyundai Motor confirmed to Reuters that it will “soon announce a new EV plant plan in the United States”, but did not give any details. So far, it is only confirmed that the Genesis Electrified GV70 will be built at Hyundai’s plant in Montgomery, Alabama.
Smart Buildings
The Smart Building Revolution Is Under Way – Tom Sime
https://www.scotsman.com/news/opinion/columnists/the-smart-building-revolution-is-under-way-tom-sime-3686116
In terms of office working, the pandemic has dramatically accelerated the growth of smart building technology. Only recently, Jupiter Research revealed insights that show the number of smart buildings globally is expected to rise from 45 million in 2022 to 115 million in 2026. This equates to a 150 per cent increase in demand for the technology across the business world. The research also stated that 90 per cent of the smart building spend comes from non-residential buildings – something I have seen evidence of with our own clients. Businesses by default commit to property and offices to accommodate their workforce and provide a location to say we are here and open for business. Now we see those same businesses change their requirements, still committing in the main to property, but requiring that property or office to work in a new ‘smart’ way for them, enabling their employees to engage with the building’s services efficiently and driving cost savings through enhanced management of the space they occupy.
To Reduce Fossil Fuel Dependence, Sustainable Buildings Are Key
https://www.sustainability-times.com/clean-cities/to-reduce-fossil-fuel-dependence-sustainable-buildings-are-key/
With the war in Ukraine dragging on, the EU is looking to accelerate its green transition in an attempt to drastically reduce its dependence on Russian fossil fuels. The European Commission will soon be proposing a new legislative package designed to increase the use of renewables and energy savings, although it still seeks to use gas from other countries. It will also cut the time it takes for renewable energy projects to receive their permits, which from now on “shall not exceed one year.” These moves highlight the great urgency with which Brussels is pushing the green shift, already a global top priority in the wake of the Covid-19 pandemic. While disentangling energy networks from Russia and replacing fossil fuels with renewables is an exceedingly complex and tedious affair, there are nonetheless a few low-hanging fruit that European policymakers – at the EU and member state level – have been promoting for quick reductions on Russian resources.
Industrial ClimateTech
UK Climate Tech Firm Carbon Clean Gets £121 Million Boost from US Oil Giant
https://www.uktech.news/climate-tech/carbon-clean-capture-oil-20220511
London-based cleantech firm Carbon Clean has received a $150m (£121m) funding boost, a record figure for a carbon capture company investment. The Series C round for the UK climate company was led by US oil giant Chevron, along with a series of big-name backers, including Samsung Ventures, Saudi Aramco Energy Ventures, and AXA Investment Managers. Carbon Clean specialises in a form of climate technology called carbon capture, a process in which excess carbon produced during industrial work is captured before it enters the atmosphere. The storage of captured carbon on a large scale comes with significant costs, with a recent paper estimating it to be around $80 to $90 per tonne.
WTR SUSTAINABLE INDEX CONSTITUENTS
Figure 23: Energy Technology Comp Table


Source: Thomson Reuters
Figure 24: Modern Mobility Comp Table


Source: Thomson Reuters
Figure 25: Industrial ClimateTech Comp Table

Source: Thomson Reuters
Figure 26: 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 and Graham Mattison who are the writers of this report, covers the BioEconomy, Emerging Growth &amp; Special Situations, ClimateTech &amp; Sustainable Investing, and Industrial Technology sectors for WTR. Mr. Severson and Mr. Mattison including members of their 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.  In certain instances, including this report, WTR will write research covering non-clients. Readers should assume that WTR may seek to turn these non-paying companies into paying clients. Likewise, WTR may seek to transform these non-clients into paying clients of it or of its affiliate, which provides services such as 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 of WTR or an affiliate might offer to clients.  The manner of WTR’s potential 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 or agents 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 May 13, 2022