Research from Water Tower Research, Water Tower Research

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
Last Week’s Research
Aspen Aerogels, Inc. (ASPN)

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

Previous Research
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
Powering Ahead with Lithium-Ion Batteries for Material Handling and Electric Vehicles

EVmo, Inc. (YAYO)

Fireside Chat Highlights – Building Customer Demand Ahead of Fleet Growth
Positioned For Growth – A “Pick and Shovel” Play on the Rapidly Growing Rideshare/Gig Market

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

Crown Electrokinetics (CRKN)

Looking through the Window into Smart Glass Solutions for the Commercial Retrofit Market
Company’s Office Building IP Portfolio Worth $94.4 Million as Assessed by a Third-Party Report

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.
SUMMARY

WTR Sustainable Index: During the week ended May 6, 2022, the WTR Sustainable Index underperformed the broader market, falling 1.2% W/W versus the S&amp;P 500 Index (down 0.2%), the Russell 2000 index (down 1.3%), and the Nasdaq Composite Index (down 1.5%). Modern Mobility and Smart Buildings saw the largest underperformance last week, down 1.4% and 1.3%, respectively. Other sub-sectors saw outperformance — Energy Technology was up 0.2% and Industrial ClimateTech was up 0.2%.
Valuation: Based on forward 12-month consensus estimates, the current P/E ratio of the WTR Sustainable index is 24.6x versus 17.7x for the S&amp;P 500.
Consensus estimates changes: During the week ended May 6, 2022, there were&nbsp;increases&nbsp;in 2022 revenue estimates for two companies each in Energy Technology and Smart Buildings and three in Modern Mobility. There were&nbsp;decreases&nbsp;in 2022 revenue estimates for four companies in Modern Mobility and one in Smart Buildings. Five companies (three in Modern Mobility and two in Smart Buildings) saw&nbsp;increases&nbsp;in 2022 EPS estimates, while five companies (two each in Energy Technology and Modern Mobility and one in Smart Buildings) saw decreases in 2022 EPS estimates.

SHARE PRICE PERFORMANCE SUMMARY
Share Price Performance
SHLS shares were up 36% following news of an increase in its revolving credit facility. PSIX shares were down 29% due to profit booking.




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 6, 2022, there were seven increases and five decreases in FY22 revenue estimates, and five increases and five 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
Biden Administration Announces $3.16 Billion from Bipartisan Infrastructure Law to Boost Domestic Battery Manufacturing and Supply Chains
https://www.energy.gov/articles/biden-administration-announces-316-billion-bipartisan-infrastructure-law-boost-domestic
The U.S. Department of Energy (DOE) today announced $3.1 billion in funding from President Biden’s Bipartisan Infrastructure Law to make more batteries and components in America, bolster domestic supply chains, create good-paying jobs, and help lower costs for families. The infrastructure investments will support the creation of new, retrofitted, and expanded commercial facilities as well as manufacturing demonstrations and battery recycling. DOE is also announcing a separate $60 million to support second-life applications for batteries once used to power EVs, as well as new processes for recycling materials back into the battery supply chain. Both funding opportunities are key components of the Administration’s whole-of-government supply chain strategy to strengthen America’s energy independence to reduce our reliance on competing nations and support the President’s goal to have electric vehicles make up half of all vehicles sales in America by 2030.
Bipartisan U.S. Senate Group Discusses Clean Energy Tax Cuts
https://www.investing.com/news/commodities-news/bipartisan-us-senate-group-discusses-cleanenergy-tax-cuts-2817714
A bipartisan group of at least a dozen U.S. senators met on Wednesday to review tax credits for clean energy initiatives, as a part of broader legislation to boost U.S. energy independence and address climate change, lawmakers said. The lawmakers, including at least four Republicans, examined a lengthy list of proposed tax credits to spur initiatives including offshore wind technology, as well as carbon capture and storage, during a 90-minute meeting in the U.S. Capitol. Lawmakers said their aim is to produce a proposal by late June that could pass the Senate with bipartisan support. The group is examining provisions from President Joe Biden's so-called Build Back Better legislation that passed the House of Representatives last year but died in the 100-seat Senate.
Modern Mobility
Siemens Mobility and DB Unveil Hydrogen-Driven Train Mireo Plus H
https://www.railway-technology.com/news/siemens-mobility-db-hydrogen-train/
Deutsche Bahn (DB) and Siemens Mobility have unveiled next-generation hydrogen-powered train, dubbed Mireo Plus H, which is designed for the H2goesRail project in Germany. The companies have also revealed a hydrogen storage tank trailer for fast mobile refueling by DB. These components of the H2goesRail project were showcased at the Siemens facility in Krefeld of Germany. Mireo Plus H train and its new infrastructure were developed for the replacement of diesel multiple-unit trains in commuter and regional transport as well as rail-related CO2 emissions reduction to zero. Germany’s Federal Ministry for Digital and Transport (BMDV) provided €13.74m for the H2goesRail project under the National Innovation Programme for Hydrogen and Fuel Cell Technology (NOW GmbH).
Hertz Woos Ford Executive Who Focuses on High-Tech Mobility
https://www.businessobserverfl.com/article/hertz-woos-ford-executive-who-focuses-on-high-tech-mobility
Auto-tech entrepreneur Ned Ryan, who created and sold two mobility-based tech businesses, has been named chief product development officer of Lee County-based rental car giant Hertz. The appointment is effective May 9, according to a statement. Ryan, the release adds, “will oversee efforts to deliver connected products and technology to enhance the customer experience as Hertz assumes an increased role in the modern mobility ecosystem.” In 2013 Ryan launched Breeze, the first flexible ride-share financing platform, which was purchased by Ford in 2016, the release states. He also founded Canvas, a vehicle subscription service purchased by Fair.com at the end of 2019. Ryan most recently served in a senior capacity at Ford, where he worked on new, digitally connected mobility businesses.
Smart Buildings
Smart Office Buildings Can Help Sniff Out Viruses but Are Vulnerable to Hacks
https://www.wsj.com/articles/smart-office-buildings-can-help-sniff-out-viruses-but-are-vulnerable-to-hacks-11651579200
The moment that Honeywell International Inc. employees enter their new headquarters in Charlotte, N.C., the smart building goes to work. A camera recognizes employees’ faces and hails an elevator programmed to bring them to their floor. Sensors on the walls measure particles and CO2 levels in meeting rooms, pumping in fresh air when levels rise too high. Higher levels of certain particles mean it is more likely that viruses could be present. In a control room, big screens show every floor in the 23-story building.
Smart Building Deployments Are Headed through the Roof
https://www.emarketer.com/content/smart-building-deployments
The number of smart buildings worldwide is projected to climb from 45 million this year to 115 million in 2026, an increase of more than 150%, as demand grows for secure, energy-efficient developments. About 90% of smart building spending will go to nonresidential properties in 2026. There’s consumer demand for this technology as well, driven by rising environmental concerns and energy costs, along with increased time spent at home. This demand, however, is not spurring the colossal growth in spending, as families can “smarten up” their houses with relatively affordable smart home devices, rather than sink big bucks into adding new systems to the building infrastructure.
Industrial ClimateTech
Race to Cut Carbon Emissions Fuels Climate Tech Boom
https://www.ft.com/content/a814bf48-e281-4e0c-bebc-6f80bd6a7b45
Companies are under growing pressure to reduce their greenhouse gas emissions and build more sustainable business models — but reinvention does not come easily to businesses that predate awareness of the climate crisis. Help is at hand, though, from a new breed of climate tech start-ups that has emerged to offer emission reduction solutions. Investor appetite for these fledgling tech businesses is growing fast. According to consultancy PwC, in the second half of 2020 and the first half of 2021, investors around the world poured $87.5bn into climate tech start-ups — a 210 per cent increase on the previous 12 months. “A lot of companies have signed up to sustainability targets and the only way they’re going to get there is to work with next-generation technologies, a lot of which are being pushed by start-ups,” says Rob Genieser, managing partner at London-based climate tech fund ETF Partners. Genieser highlights shipping as a good example. “The industry transports a large percentage of the world’s goods and there’s pressure on it to decarbonize,” he says. Regulators are introducing emissions targets and fast-rising fuel prices mean there is a growing economic incentive to reduce consumption, too.
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 6, 2022