You may have heard of Buddy Platform and its Buddy Ohm's promise to save energy costs for enterprises. But have you heard of Building IQ (BIQ) which even has an AI predictive algorithm software for energy management that is trading at just 5% of BUD's market capitalisation? You probably have not and as you can see there are just a handful of shareholders talking about this stock on HC.
BIQ is undergoing a 1:1 rights and while it has gone ex-entitlement, IMO the mcap post rights is still a paltry $15m and its annual revenue is heading towards $7m by 2H 2017.
BUILDING IQ (BIQ)
SUMMARY ANALYSIS
MCAP: $15.4M @ 8.5c (post completion of CR)
Business :
Building IQ is an energy management software company headquartered in California whose mission is to redefine the way energy is managed in commercial buildings. BIQ’s suite of software offerings utilizes Predictive Energy Optimisation (PEO)- the only energy management software platform that uses AI machine learning algorithm base system that provides ‘round the clock’ energy management optimization based on a thermal energy model that forecasts energy demand and automatically adjusts a building’s HVAC settings to continuously optimize energy use and peak loads. BIQ works with existing Building Energy Managements systems (BEMS) and utility demand response systems, and incorporates weather forecasts, occupant comfort, utility prices and demand response signals in its optimization algorithms. BIQ automatically reduces energy consumption, cost and emissions while maintaining or improving occupant comfort.
https://buildingiq.com/products/5i-intelligent-energy-platform/
Building IQ provides award winning, cloud-based Software as a Service (SaaS) energy management and optimisation solution for owners and managers of large commercial building portfolios. BIQ’s 5i software platform utilises intelligent predictive analysis and automated control to consistently reduce heating, ventilation, and HVAC (air conditioning) energy usage costs (which collectively represent a significant portion of a building’s energy cost) by 10-25%.
BIQ is well placed to capitalise on the several macro trends, namely the long term rising trend of electricity prices and the demand for building efficiency and sustainability. The rise of “Internet of Things (IoT)” and cloud computing technologies has enabled innovative solutions, such as BiQ to combine technology intelligence and connectivity to unlock new value from existing assets at a lower cost and significantly faster ROI to traditional approaches.
BIQ’s core technology was originally developed and acquired from CSIRO (royalties no longer payable) and BIQ has since enhanced the technology to incorporate a Predictive Energy Optimisation (PEO) platform with energy efficiency and portfolio management capabilities,
BIQ operates in US(HQ) and Australia and is backed by strategic and financial investors including Exto Partners Australia Pty Ltd , Siemens Venture GMBH and Paladin Capital Group.
Operating with a SaaS revenue model, BIQ generates monthly recurring revenues via licence to its Saas platform which is generally charged on a per square foot basis.
What to like about BIQ?
- Under the radar stock- the one stock premised on machine learning (AI) algorithm and predictive data analyses (Big Data) that the market has lost sight of!
- Large global addressable market – the Building Energy Management system (BEMS) market is valued at US$2.5B in 2015 and expected to achieve a 18.2% CAGR to reach $US10.8B in 2024
- https://www.tractica.com/automation-robotics/buildingiq-employs-ai-for-maximum-building-system-efficiency/
- Market Cap of $15m with a well-established technology and business platform significantly undervalues this microcap gem. Mcap/Revenue of 1.87x (based on $7.5m revenues expected for 2H 17) is super cheap for a SaaS model, BIQ is a fraction (1/20 or just 5%) of BUD’s (Buddy Platform) mcap of $300m and represents a significantly cheaper entry into the BEMS market. If I am not wrong too, BIQ’s 5i PEO platform has the automated adjusting mechanism to change HVAC setting to optimal usage while BUD will be incorporating the automation in future release.
- IPO at $1 with an initial lofty mcap of $84.5m, you can now buy BIQ at a ‘steal’ for less than a 1/10th of what James Spencely (Vocus founder) and Siemens GMBH paid for the IPO.
- Great technology with a much needed value proposition to reduce energy costs
Proven technology platform contracted in over 1,000 buildings in US and Australia on 5i platform including in landmark buildings such as Rockefeller Centre in New York.
https://www.mathworks.com/company/user_stories/buildingiq-develops-proactive-algorithms-for-hvac-energy-optimization-in-large-scale-buildings.html
https://www.csiro.au/en/Research/EF/Areas/Electricity-grids-and-systems/Intelligent-systems/Opticool
BIQ has been honoured as Winner of AIRAH Award for Excellence in Innovation, Tech23’s Greatest Potential Award, Red Herring’s Asia 100 Award, Environmental Design + Construction and Sustainable Facility’s Readers’ Choice Award and Connectivity Week’s Buildy Award.
Low to no upfront cost (very low investment) to customers with immediate free cashflow to customers
- Operating track record – To date, it has achieved an annual recurring revenue of $5m which should scale up to $7.5m in 2H17. It has contract for 77million sq ft and expected to reach 100million sq ft over 65 buildings in 2H17. Cashflow neutral could be expected within the next 2 quarters.
- US patent received for 5i technology platform
http://reneweconomy.com.au/buildingiq-receives-u-s-patent-underlying-technology-5i-intelligent-energy-management-platform-69744/
IMO I believe that BIQ should already be worth at least a mcap of $30m or 16.5c share price for an immediate upside of 94%*. This is in actual fact a very conservative assessment for BIQ's technology and achievements to date (especially in comparison to its much more expensive peer Buddy Platform (BUD)). As the business gets more traction in its global expansion (including Asia), we should expect a re-rating with a possible multi-bagger outcome.
* I compare against other microcap tech stocks (e.g SKF @ $29.3m)
Whilst this is a fairly illiquid stock, my experience with other illiquid undervalued microcaps is that once there is greater awareness of the potential of the stock, substantial interests will flood in, just witness 3DP, K2F and even more recently SKF as examples.
DYOR!
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Data Winners Holdings: 3DP K2F LNU BIQ BTH IXU CT1 SKT
Other Potentials: GSW YOJ 4DS FFG DUB PIQ TTT
