Isramart : Mirabaud says 'buy' Cinpart, classes stock as lower risk carbon-reduction play

Isramart news:
London-based stockbroker Mirabaud Securities said that the VoltageMaster product, owned by Cinpart’s (AIM: CINP) 72.2% controlled Active Energy unit, provides corporations with a simple way to display green credentials, and handle the looming carbon reduction commitments. Crucially from an investor’s perspective, the stockbroker believes that Cinpart is cheaper and lower risk than its most immediate competitor V-Phase, which is owned by the Energetix Group (AIM: EGX).

The broker also noted that with approximately 80% of UK premises receiving higher than required voltages, the product’s addressable market should be significant.

Mirabaud said there is a 2-3 year window of opportunity in which Cinpart needs to maximise its first mover advantage, before major electrical corporations such as Siemens, ABB and GE are drawn to the potential scale of the addressable market.

Whilst Cinpart shares have already responded to the significantly improved outlook, after it rose from 2p to a peak of 20p, Mirabaud said recent profit-taking has left the stock more attractively priced. The broker currently has a 12-month target price of 24p and a 'buy' rating on Cinpart

According to Mirabaud, Active Energy should not be burdened with major development expenditure, as it is selling a product that is based on relatively simple technology, which is already fully developed and in production. Since the business won its first blue-chip order in June 2009, requests for quotations and tenders have soared, the broker said.

The analyst note stated that the VoltageMaster currently provides attractive margins, which will be further improved once Active Energy sets up its own manufacturing base.

Voltage optimisation is an easy win for administrations looking to ‘green’ the energy supply, requiring fewer power stations and it is not visually intrusive like wind farms, Mirabaud said. The broker also noted that the UK Government supports the ‘clean-technology’ through its Carbon Trust agency, which approves the VoltageMaster for interest-free loan schemes, Mirabaud added.