LON:IES | RED Finally Ready For Liftoff? - Https://redtenergy.com/

19th Sep '18 by tagware

4 comments 2428 reads

We've been with RED for several years and over this long time, the share price has bounced around the 5-9p range in that time. However, in 2018 the CEO has put together a Sales and Marketing team that finally seems to pay dividends (Sorry for the Pun)

For those that like to view the solution. Here is the video link explaining. For the rest of us keep reading!

RED has now established a Production product (GEN3) that they have been able to convince the Jabil manufacture to produce them in 70 places over most parts of the world. Thus sidestepping the costs of manufacturing and stock that have to normally financed by the company.

They also now have sufficient size deals over the 100+ million mark. To allow institutional investors to look and actually put together finance packages.

There is already strong interested in backing both Wind and PV farms as they are in the 20-25 year term investment. These achieve a 6-8% return. When you add the RED energy engine which allows for extended power for over 4+ hrs periods. Which both National Grid and large corp users are realising can drastically cut the electricity bill and provide Grid Balancing services to the National Grid providing the JAM to the deal. This then increases the return to 10%+ over a 25-year time span. Something that an institutional investor would think a reasonable investment.

RED has been able to obtain and 1,600 units commitment from a Germany order. As they are further forward in renewable markets. This along with the orders from the Monash University in Melbourne, Australia place them for even more growth through word of mouth. With the October 2018 event to still arrive in Australia for more spreading of the word.

In August 2018 they announced a UK order from Anglian Water again a small step for this group. However, a significant one. As this is a large well know UK company which has a large energy bill of £77 million that can see significant savings to place there toe into this new market. The potential of this client with its 1200 water treatment and water recycling centres would keep RED busy. However, this is one of the 10 companies that have the same problem. They can now deploy…

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gbjbaanb

19th Sep '18

I'll agree, been watching this for some time (and bought some ages ago as I like investing in "socially good" companies occasionally).

The German contract - and more importantly the financing from an infrastructure fund - is the breakout event. The financing is the thing that changes this from places that might buy a machine, to companies buying lots of machines as they see the benefits over the long term, and the infrastructure fund appears to be very happy with the concept as its allowing them to turn a solar farm returning 4 to 6% into a combined, bigger farm that will return 10% (ie scale, and also selling more energy all night as well as all day) and over 20 years.

The Anglian Water pilot by itself would be good for renewables and RedT storage,and I think that will end up rolled out to all remote sites to reduce their power costs (I heard a 40% saving, though its not sure if that refers to adding local renewable generation of just cost of buying and power cheaply and using it at peak times). But that will take time for them to validate the effectiveness so I doubt they'll be seen as a real sales source this year.

The H1 interims were pants, but those teasing numbers of going from 37 machines sold to hundreds will make the H2 finals something of great interest - and a share price spike IMHO.

This is a better 6min video on the new German contract and what's happening recently.
https://www.brrmedia.co.uk/broadcasts-embed/5ba0bc04d977613988d2f5e2/?event&popup=true

HHR

25th Sep '18

Hello tagware, gbjbaanb,

Thanks for writing about redt which has been on my watchlist for a while although I have yet to invest.

Like you, I think the world leading technology position in a nascent growing market is very interesting.

I was wondering if you have any thoughts on the recent announcement regarding the German Grid Project Financing? I have carefully read this announcement and the original contract award, and I don't really understand the role of the energy infrastructure fund and its eur37m 'investment'.

As far as I can see Redt has a customer (ESM) for which it is a supplier - why does it need an intermediary investor? As you point out the manufacturing is outsourced so why can't ESM simply pay a deposit to cover production costs? Do you think the eur37m will end up being a placing or a bond or something like that, if so I wonder what the terms will be. It says in the interims that red will need further funding to make it to profitability so maybe this is the start of that funding. But the funding appears to be specifically for this project only so I don't see how redt could issue equity just for one project. Maybe the eur37m is for ESM not Red - but the announcement doesn't read that way to me.

I don't know why redt doesn't cover these points in the announcements but maybe they've said it somewhere else and I didn't find it.
Thanks

27th Sep '18

I took the financing to be something provided to ECM so that they could buy this stuff over a longer period rather than upfront sales. These things cost a lot and many companies would prefer to pay for them spread over time.

So the big factor is that the financing is available for these things, so other companies might be persuaded to try them given that.

I imagine RedT are highlighting it for this reason, as far as they're concerned its really nothing to do with their sale, except that it facilitates further ones and shows a much greater investment case in RedT.

As for a deposit - someone has to pay for the cost of making the machines and I don't think RedT is capable of paying for them now and receiving the money 20 years later :) that's the point of financing, someone else does that for them.

I doubt it'll be a bond, but you never know. I assumed it would be more like a share placement from a company such as Renewables Infrastructure (LON:TRIG) or funded from their existing cash.

Those are my thoughts, I'm not certain, and I think RedT will need a little more cash to burn through while it makes enough machines to support itself. It sounds like it has the sales pipeline to do this.

I did send them an email about their sales pipeline but they haven't responded to me.

mercury61

8th Jul '19

Got exposure and publicity by featuring on last weeks Countryfile BBC2

RED finally ready for Liftoff? - https://redtenergy.com/

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Tagware

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