Energy One Limited ASX:EOL

• MC $173.6m, 26m shares
• Provides platforms for energy generators, retailers, producers, shippers, large scale users and traders to manage their entire wholesale energy trading portfolio.
• 4 main solutions:

1. Energy Flow - automate/manage business process and integrate systems
2. Energy Offer - Bidding/offering, dispatch, logistics solution
3. EOT - front, middle, back office solutions
4. NemSight - real-time presentation and historical analysis tool

Australasian (Au/NZ/Sg) operations:

• 44% of revenue in FY21. EBIDTA margin 31%. Growing organically.

Acquisitions:

• Acquired Contigo (Europe) - which is an energy trading and risk management (ETRM) software in 2018.
• Acquired eZenergy (France) in June 2020 - energy trading and software/services to European customers.
• Together these two European acquisitions contributed 54% revenue in FY21. So far management has demonstrated ability to identify synergies between acquisitions - eg offering bundled solutions to customers / cross selling.
• Acquired Belgian energy trading company EGSSIS (similar to eZenergy) in October 2021 for A$6.8m cash + equity.

Management:

• CEO Shaun Ankers - 990.5k shares
• Chairman Andrew Borwick - 500k shares
• NID Ian Ferrier (former chair of Goodman Group) - 7m shares
• NID Ottmar Weiss 1.2m shares
• NID Vaughan Busby - 4.1m shares
• Board owns slightly over 50% of shares issued. Director selling in September 2020 to improve liquidity of shares, and further selling in December - March 2021. They still hold very significant amount of shares.

I like:

• Management with skin in the game - acquisitions have been largely synergistic, cash producing and together they help EOL become the one-stop shop for energy traders.
• Scalable SaaS business with low churn rate (3-4% churn last 3 years).
• Long runway for growth - CEO pointed out European operations form 5% of market share across Europe. Also previous mention of expanding to US.
• High gross margins 40+%, strong cash generation (growing too)
• No debt, strong cash reserves - though they have used this to acquire EGSSIS in October 2021.
• Ongoing R&D to improve their solutions (not sure what % of revenue goes into this)

Not so nice:

• Quite expensive at the moment, 18x EV/EBITDA.
• May take some time for EOL to integrate their new acquisition
• Potential European energy crisis - https://www.forbes.com/sites/arielcohen/2021/10/14/europes-self-inflicted-energy-crisis/?sh=aa81a4a2af3a , this may affect EOL's customers.
• Technically, chart showing some weakness in the short term.

Disclaimer: No position at this stage.