Stonegate Capital Partners Updates Coverage On Aemetis, Inc. (Nasdaq: AMTX) Q1 2023

DALLAS, TX -- May 10th, 2023 -- Aemetis, Inc. (Nasdaq:AMTX): Stonegate Capital Partners updates coverage on Aemetis, Inc. (Nasdaq:AMTX). The full report can be accessed by clicking on the following link: Aemetis, Inc. Q1 2023 Report

Company Summary

• 5-year plan show lots of growth: Aemetis outlined a 5-year plan to reach $2.0B in revenue and $682M in adjusted EBITDA by 2027 vs F22 revenue and adjusted EBITDA of $274.6M and $(22.4)M. respectively. While this is a long-term plan, AMTX has shown the ability to reach their benchmarks with the recent announcement of contract wins in India, continued completion of dairy biogas digesters, and the recent improvements made in the Keyes Ethanol Plant.
• Dairy biogas pipeline shows potential: Aemetis expects to build new dairies biogas digesters over the next five years for a total of 66 dairies. Assuming proper execution, the economics for these projects are compelling. For each dairy, the feedstock is low cost, has 25-year contracts, and should produce $2.5M average revenue per dairy per year. In FY27, Aemetis is expecting revenue of $302.3M and adjusted EBITDA of $264.1M. AMTX is expected to have 17 completed plants by the end of 2023.
• Jet/diesel plant is source of upside: Aemetis announced in January 2021 that it is planning to build a 90M gallon renewable jet and diesel plant using below zero carbon intensity cellulosic hydrogen produced from waste almond orchard wood. The plant is expected to supply the aviation and truck markets with ultra-low carbon renewable fuels. Aemetis’ expects revenue of $700.9M and adjusted EBITDA of $192.0M by FY27.
• Aviation fuel offtake agreements signed: In September 2021, Aemetis announced a 10-year, 250M gallon, sustainable aviation fuel offtake agreement with Delta Airlines. Since then, Aemetis has signed additional offtake agreements with American Airlines, Quantas, and Japan Airlines for an aggregate estimated value of more than $3.8B.
• Ethanol plants are strategic to RNG business: AMTX currently operates a 65M gallon ethanol plant in Keyes, California that is also strategic to the Aemetis dairy biogas project. Aside from ethanol for the fuel market, the plant also produces animal feed, which is delivered to 80 dairies, creating synergies that could turn these dairies into potential biogas suppliers. Furthermore, Aemetis can use the RNG generated at this plant without having to wait for a utility connection to generate revenue. Growth in the RNG segment is fueled by $23M of grants related to RNG, completion of the RNG interconnection unit with PG&E’s pipeline, and completing construction of the biogas-to-RNG upgrading facility.
• India plant is debt free and adds additional upside: AMTX operates a 50M gallon biodiesel plant in India. Importantly, the Indian government oil marketing companies are the primary purchaser of AMTX’s biodiesel. Recently, AMTX won a $34M contract to deliver biodiesel in 2Q23. This plant is expected to operate at near full capacity starting in 1H23 as the Company becomes more comfortable and familiar with the bidding process.
• Valuation – We are using a SOTP analysis. We are applying various EV/EBITDA multiples to Aemetis’ F27 projections and couple a discount range of 27.5% to 32.5% to discount the value to today with an annual shares outstanding growth rate range of 1% to 5%. As a result, we arrive at a valuation range of $24.95 to $36.72 with a midpoint of $30.21.