CHAR Technologies is a buy, this analyst says

Paradigm Capital analyst Marvin Wolff maintained a “Buy” rating and $0.55 target price for CHAR Technologies (CHAR Technologies Stock Quote, Chart, News, Analysts, Financials TSXV:YES) in a Sept. 1 report following the company’s fiscal third-quarter results, saying its project pipeline supports long-term growth despite near-term losses.

Toronto-based CHAR uses proprietary pyrolysis technology to convert waste biomass into biocoal, renewable natural gas and SulfaCHAR fertilizer. Its first commercial plant, located in Thorold, Ontario, is structured as a 50/50 joint venture with BMI Group. ArcelorMittal holds a 10.6% stake in CHAR and is expected to use its biocoal for steelmaking at its Dofasco works in Hamilton.

For Q3, CHAR reported revenue of $437,000, Adjusted EBITDA of negative $1.2-million and a net loss of $0.02 per share. That compared with Wolff’s forecasts of $1.1-million, negative $942,000 and a loss of $0.02, respectively. Cash rose to $5-million following BMI Group’s July $8-million investment for a 50% interest in the Thorold facility, which followed a $2-million equity investment in May.

At Thorold, biocoal production is currently running at about 50 tons per month and is expected to ramp to 400 tons per month (5,000 tons per year) by the end of 2025. Phase 2, focused on RNG production, is targeting start-up in the third quarter of 2026 with capacity of 250,000 GJ annually, to be doubled through a second line.

“The Thorold plant is expected to generate $20-million in annual revenue and $8-million in EBITDA at full run-rate, implying a 29 per cent project IRR,” Wolff said.

Dofasco and a Canadian natural gas supplier have signed long-term contracts for offtake.

Beyond Thorold, CHAR has three additional Ontario and Quebec plants in development and six more in feasibility studies across Canada, which could bring total output to 1,365,000 GJ of RNG and 27,300 tons of biocoal annually by 2029.

Wolff forecasts Adjusted EBITDA of negative $6.2-million on $2.5-million in revenue in fiscal 2025, compared with his prior EBITDA forecast of negative $5.9-million and unchanged revenue estimate of $1.5-million. He expects results to improve to positive $1.9-million in EBITDA on $19.9-million in revenue in fiscal 2026, with no change to his prior estimates.

“Using a 7x EV/EBITDA multiple on fiscal 2029 estimated EBITDA of $19.3-million and discounting by 9% per year, we arrive at our $0.55 target,” he said. “We reiterate our buy recommendation.”

-30-