Energy Mad IPO

[Random_Walker]

Is it true that Energy Mad's CFL's are more energy efficient than other CFL's? I thought thats what they were selling?

[Ekrub]

I got the flyer in the mail too....this is their link to find out more;

http://www.energymad.com/nz/Invest.htm

[Catalyst]

Just had a quick look at the numbers in the Prospectus. Assuming they raise $5m @ $1, they will have 37.7m shares @ $1 and the metrics look like this:

31 March 2011 actual figures
EBITDA = $1.5m
NPAT = $0.8m
Net debt = +$4m (assuming $5m raised is used to pay off $1m debt)

PE = $1 / ($0.8m/37.7m) = 47x
EV/EBITDA = (37.7m x $1 - $4m) / $1.5m = 22x

31 March 2012 company projections
EBITDA = $3.5m
NPAT = $2.1m
Net debt = +$6m

PE = $1 / ($2.1m/37.7m) = 18x
EV/EBITDA = (37.7m x $1 - $6m) / $3.5m = 9x

No dividends are projected.

There's some quite agressive growth projections from the company for FY12 and FY13 but these multiples are still a bit rich for my liking, especially in the current financial climate. The ticker says it all really, "MAD".

[Random_Walker]

Based on the following quote from the Energy Mad prospectus it seems they are claiming that their CFL's are better than other CFL's and that they have patents over IP that results in the improvements?

Energy Mad developed its Ecobulbs to be smaller, brighter, longer lasting and have a lower

mercury content than other commonly available energy-efficient light bulbs. These Ecobulbsincorporate innovative technical features which are not present in energy-efficient light

bulbs targeted only at retail customers. These innovative features deliver valuable peakload reductions to electricity utilities. Where possible Energy Mad intellectual property hasbeen protected, with patents and designs granted in Australia, China, Europe, New Zealand

and the United States.

[Steve]

I received my flyer yesterday and noted that it was dated 1st September, inviting me to the local roadshow on 31st August! Obviously they don't really want me to attend...

[_Michael]

I gave up with those compact fluorescent bulbs a while back after I got fed up with the time they took to give an even mediocre level of light - AND they didn't last that long either!! Plus they are pretty ugly looking too and cannot be used with dimmers - I went back to halogen and standard incandescent lamps. In all an expensive exercise so I would not touch this IPO.....

http://www.rightlight.govt.nz/

The government are advertising this website promoting CFL bulbs.

On here the Consumer research suggests the opposite to what you are saying - that brightness exceeds standard 100w bulb and longevity is 5x greater.

On a separate note this is a disappointing thread for the future of NZ

How so >

Well here we have an innovative local company that set themselves an ambitious goal 7 years ago and have exceeded that goal.

Now they are setting new goals that include competing with global multinationals, and require capital to do so.

THIS IS EXACTLY WHAT NEW ZEALAND NEEDS - MORE COMPANIES LIKE THIS AND INVESTORS WILLING TO TAKE A PUNT ON HELPING THEM GROW!!!

Yet in this "share market" forum full of complaints about weak NZ capital markets all people can do is run them down and criticise.

Yes there is risk in this, like there is risk in Ecoya and there was risk in Charlies but...

IF WE DO NOT START BACKING OUR OWN AND TRYING TO GET NEW KIWI BUSINESSES OFF THE GROUND, OUR KIDS WE BE ORDER TAKING LOW WAGE EARNING SLAVES TO THE MULTINATIONALS - AS MOST OF US HERE IN NZ ALREADY ARE !!!! AND WE MAY AS WELL NOT BOTHER HAVING OUR OWN EXCHANGE !!!!

Give me a



if you agree

[Temoana]

My wife and I went to the Chch presentation last Friday. The savories were OK but the sandwiches were quite nice - that IS why people go to these things isn't it

The main reason we went was because the chair of the board is a Uni mate of mine I haven't see since 1973 (don't even do the maths) AND we were interested in how they expected to flog off enough of these bulbs to make a go of it. So from what I distilled:

1) The company founders have significant investment in the company ~$30M (that they seem to be wanting to keep) but need $5-6 mill to move to the next phase.
2) Their market advantage is that their bulbs are more power-generator-friendly so they have been able to get their support in promo campaigns in NZ, Aus, US and parts of Europe. They say their product is considerably more reliable and produces what it says than the cheap also rans which are giving the compact fluro bulbs a bad name.
3) Main competition is with the 3 big players (Phillips etc) but they want to stay under their radar and only take 0.3% of parts of the Euro and US markets = $21M by 2013. These competitor bulbs are not "generator-friendly" so leaving a niche for EMad bulbs. They are committed to high spend on R&D and have new designs and more on the way. Their line includes dimmable CFLs.
4) Bulbs are their (patented) design made in China. While they admitted that protecting their patent in China was not ensured but if copied bulbs appeared in the West, those distributors could be sued.
5) The company seems full of highly qualified engineering types (not hype marketers) and so they seem high on potential.

Catalyst covered some of their financials.

And I do agree with Michael that it is a good thing to support NZ startups and expansions - where they look like they have potential to make it. I am not super-convinced about them (and especially after getting some NWF a year or so back that haven't done well at all) but we are likely to put up to $5k into MAD.

[ratkin]

Im not convinced , will be keeping money in pocket

[minimoke]

IF WE DO NOT START BACKING OUR OWN AND TRYING TO GET NEW KIWI BUSINESSES OFF THE GROUND, OUR KIDS WE BE ORDER TAKING LOW WAGE EARNING SLAVES TO THE MULTINATIONALS - AS MOST OF US HERE IN NZ ALREADY ARE !!!! AND WE MAY AS WELL NOT BOTHER HAVING OUR OWN EXCHANGE !!!!

A bit of perspective please. There is little I see in the prosepctus that will prevent our kids from being low wage slaves to multinationals. Energy Mad employ 14 people - their plans offer nothing that will create work for New Zealanders or drive high value wages. At best there wil be some R&D work and a bit more back office but labour growth will be in the manufacturing facility (currently running at 10% capacity) and business development off shore. If we want to lessen the risk of a low wage economy we need to create innovative niche manufacturing not invest in low value high volume consumerables like light bulbs. The Asians will beat us on that front no matter what. Will investing in a company whose primary activity is the importation and distribution of energy-efficient light bulbs and installation of energy-efficient products prevent us from becoming wage slaves - I don't think so.

This IPO, at best is destined to take the same path as Charlies and 42Below. At some point an overseas company will see value in the supply chain model and perhaps the intellectual property and snap it up. Apart from the head honcho's in these firms I'm not sure we could say they have truly done anything to prevent us from becoming a wage slave economy.

If we want to invest because there is a buck or tow to be made in the next few years then this IPO may still be worth looking at. If we want to invest as a contribution to changing our economy I don't think this is the way to go.

Still doing my research on this one - leaning towards perhaps throwing a bit of cash at it. Recognising its going to be a low liquidity company so I' won't be able to recoup my cash in the market - will be looking at takeover potetnial.

[POSSUM THE CAT]

Why Invest in obsolete Technology. Would not touch with a Barge Pole. I am all ready changing to Quartz Halogen three piece lights, far better light. Cheaper after first installation, more choice, and work with dimmers.