Author: Mark Susanto

Energy Action is undergoing a transition from a business with a competitive advantage, high margins and high recurring revenue to an acquisitive machine with lower margins and less recurring revenue and a gradually reducing competitive advantage, as well as higher working capital needs. I have sold my Energy Action shares on open and (as I stated here, just before market open) I have removed them from the Hypothetical Ethical portfolio.

So I thought I should share my thoughts on the recent announcement by Energy Action (ASX: EAX).

Not everyone I’ve talked to sees the same value I do in Energy Action (ASX:EAX) so I thought I would share this valuation with my readers; please feel free to let me know what you think.

The share price of Energy Action has been trading above $3 for some time now, having reached as high as $3.50. The company is growing revenue streams, and in a recent update, informed shareholders that it has appointed Fort Street Advisers to help “assess growth opportunities in the market.” They have also appointed an executive search firm to help find a replacement for Managing Director Valerie Duncan, who has signaled her intent to retire at some point in 2014. Evergreen Capital Partners and Perennial Investment Partners hold approximately 9% and 6% of the company respectively. Citigroup Global Markets also holds a relevant interest in about 5% of the company, subject to an obligation to return the borrowed stock to the lender. I don’t dare speculate as to what this means, however, what is certain is that Energy Action is no longer under the radar.

Energy Action Group (ASX: EAX) is rare among environmentally positive equities in that it is profitable and is able to pay regular dividends. It was listed on the ASX in October 2011 at $1.00 per share. EAX provides energy retrofitting services to government and private organisations. It also owns the Australian Energy Exchange where energy retailers bid to provide the best energy prices to organisations and those organisations are able to re-sell excess energy already contracted. Both services provide substantial savings to their customers and have environmental benefits.