more_reports

Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe

TICKERS: BQE; BTQNF

Water Treatment Co. Reports Strong Q2 2024 Results
Research Report

View Important Disclosures for this Article
Share on Stocktwits

Source:

In an Atrium Research note, analysts Nicholas Cortellucci and Ben Pirie noted that they are confident in BQE Water (BQE:TSXV; BTQNF:OTC) and will be adjusting their 2025 expectations upward.

Atrium Research analysts Nicholas Cortellucci and Ben Pirie, in a research report published on August 28, 2024, provided an update on BQE Water (BQE:TSXV; BTQNF:OTC) following the company's second quarter 2024 financial results. The analysts maintained their Buy rating and raised their target price to CA$77.00 from CA$71.00.

BQE Water reported Q2 2024 results that exceeded Atrium Research's revenue expectations and were in line with EBITDA estimates.

Cortellucci and Pirie noted, "The highlight of the quarter was the 79% YoY increase in recurring operations revenue due to new plants coming online." They added, "BQE remains one of our highest conviction names at the moment because of the emergence of this segment."

Key highlights from the report include:
- Proportional revenue of CA$6.1M (+5% YoY) vs. Atrium's estimate of CA$5.7M
- Operations services revenue of CA$2.6M (+79% YoY, 42% of revenue)
- Adjusted EBITDA of CA$1.34M, in line with Atrium's estimate of CA$1.4M
- BQE's share of JV net income was CA$1.1M, significantly above Atrium's estimate of CA$0.4M

The analysts highlighted management's outlook, stating, "Management expects an even stronger H2, led by several new large projects being initiated in Q3 in the technical services segment."

BQE Water's strategic focus includes expanding its recurring revenue segment and capitalizing on increasing demand for water treatment solutions in the mining industry. The company recently renewed its operations services agreement with Glencore for the Raglan Mine in Quebec and secured a new contract for selenium removal in Latin America.

Atrium Research's valuation methodology for BQE Water is based on an EBITDA multiple. "Given the execution in the recurring segment thus far in 2024, we are increasing our target multiple to 11.5x 2025E EBITDA (previously 11x), leading to an increased target price of CA$77.00/share," the analysts explained.

With a Buy rating and a target price of CA$77.00, representing a potential return of 17% from the price at the time of the report of CA$66.00, Atrium Research sees continued upside for BQE Water.

Cortellucci and Pirie concluded, "We remain very confident in BQE and are adjusting our 2025 expectations upward slightly."


Want to be the first to know about interesting Special Situations investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter. Subscribe

Important Disclosures:

  1. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

For additional disclosures, please click here.

Disclosures for Atrium Research, BQE Water, August 28, 2024

Analyst Certification Each authoring analyst of Atrium Research on this report certifies that (i) the recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and objective views about any and all of the designated securities discussed (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in the research, (iii) to the best of the authoring analyst’s knowledge, she/he is not in receipt of material non-public information about the issuer, (iv) the analyst does not own common shares, options, or warrants in the company under coverage, and (v) the analysts adhere to the CFA Institute guidelines for analyst independence.

About Atrium Research 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. For further information on our team, please visit https://www.atriumresearch.ca/team.

General Information Atrium Research Corporation (ARC) has created and distributed this report. This report is based on information we considered reliable; we have not been provided with any material non-public information by the company (or companies) discussed in this report. We do not represent that this report is accurate or complete and it should not be relied upon as such; further any information in this report is subject to change without any formal or type of notice provided. Investors should consider this report as only one factor in their investment decisions; this report is not intended as a replacement for investor’s independent judgment. ARC is not an IIROC registered dealer and does not offer investment-banking services to its clients. ARC (and its employees) do not own, trade or have a beneficial interest in the securities of the companies we provide research services for and does not serve as an officer or Director of the companies discussed in this report. ARC does not make a market in any securities. This report is not disseminated in connection with any distribution of securities and is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. ARC does not make any warranties, expressed or implied, as to the results to be obtained from using this information and makes no express of implied warranties for particular use. Anyone using this report assumes full responsibility for whatever results they obtain. This does not constitute a personal recommendation or take into account any financial or investment objectives, financial situations or needs of individuals. This report has not been prepared for any particular individual or institution. Recipients should consider whether any information in this report is suitable for their particular circumstances and should seek professional advice. Past performance is not a guide for future results, future returns are not guaranteed, and loss of original capital may occur. Neither ARC nor any person employed by ARC accepts any liability whatsoever for any direct or indirect loss resulting from any use of its research or the information it contains. This report contains "forward looking" statements. Forward-looking statements regarding the Company and/or stock’s performance inherently involve risks and uncertainties that could cause actual results to differ from such forward-looking statements. Such statements involve a number of risks and uncertainties such as competition, technology shifts, market demand and the company’s (and management’s) ability to correctly forecast financial estimates; please see the company’s MD&A “Risk Factors” Section for a more complete discussion of company specific risks for the company discussed in this report. ARC is receiving a cash compensation from BQE Water Inc. for 12-months of research coverage. ARC retains full editorial control over its research content. ARC does not have investment banking relationships and does not expect to receive any investment banking driven income. ARC reports are primarily disseminated electronically and, in some cases, printed form. Electronic reports are simultaneously available to all recipients in any form. Reprints of ARC reports are prohibited without permission. To receive future reports on covered companies please visit https://www.atriumresearch.ca/research or subscribe on our website. The information contained in this report is intended to be viewed only in jurisdictions where it may be legally viewed and is not intended for use by any person or entity in any jurisdiction where such use would be contrary to local regulations or which would require any registration requirement within such jurisdiction.





Want to read more about Special Situations investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe