Message-ID: <24585638.1075851529214.JavaMail.evans@thyme> Date: Tue, 23 Oct 2001 11:19:18 -0700 (PDT) From: textsf@stockfirst.com To: alewis@ect.enron.com Subject: Research Report - MAHT Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: STOCKFIRST @ENRON X-To: alewis@ect.enron.com X-cc: X-bcc: X-Folder: \ALEWIS (Non-Privileged)\Deleted Items X-Origin: LEWIS-A X-FileName: ALEWIS (Non-Privileged).pst RESEARCH REPORT from The Investor Online www.investorstool-kit.com/maht/ We are a new financial service striving to find investment opportunities. Each recommendation is extensively researched, utilizing traditional fundamental analysis, combined with leading-edge technical analysis. - The Investor Online If you have received this in error, or wish to unsubscribe, please find instructions at bottom of page. ____________________________________ Malahat Energy Corporation Symbol: MAHT Recommended: 10/22/01 Price at 10/22/01: $1.70 Target: $6.24 for FY2003 52 Week Range: $1.10 - $3.75 ____________________________________ * Financial Summary Malahat Energy Corporation (Malahat) is a development stage company engaged in the development of a bio fuel system to convert organic waste material into an economical, synthesized fuel gas for energy consumption. For the eight months ended 3/31/01, the Company reported no revenue. The Company is coming out of the R&D stage and launching into initial production and sales. Net loss decreased 8% to $100,480. Lower loss reflects lower general and administrative expenses due to reduced costs related to the issuance of stock for compensation. Revenue projection for FY2002 is $1,943,689, with a net profit of $492,495. More from Market Guide: Balance Sheet (http://yahoo.marketguide.com/MGI/mg.asp?target=%2Fstocks%2F companyinformation%2Fbalancesheet%2Fqbalancestd&Ticker=M AHT) and Income Statement (http://yahoo.marketguide.com/MGI/mg.asp?target=%2Fstocks%2F companyinformation%2Fincomestmt%2Fqincomestd&Ticker=MA HT) ____________________________________ * Share-Related Items Recent Price (10/22/01) - $1.70 Market Capitalization - $26.35M Shares Outstanding - 15.5M Float - 3.40M Daily Volume (3-month avg) - 15.0K Daily Volume (10-day avg) - 25.0K Delayed Quote - http://quote.yahoo.com/q?s=maht.ob&d=v1 ____________________________________ * Business Description - Introduction Malahat manufactures BioFuel(TM) Systems capable of economically producing a green, renewable fuel gas from biomass fuel such as wood and agricultural waste. Malahat's proprietary, patent-pending waste-to-energy BioFuel(TM) Systems produce both natural gas and electricity and are designed specifically, to meet the power requirements of those businesses and industries hit hardest by the world's developing energy crisis. The M500 is the first in the M-Series of BioFuel(TM) Systems that Malahat has designed and developed to convert biomass waste materials (like wood) into a useable, SynGas(TM). Malahat's SynGas(TM) can deliver on-site power or heat flexibly and can be used instantly or compressed, cooled and stored for consumption at a later date. Go to www.malahatenergy.com/s/Product.asp and www.malahatenergy.com/s/Technology.asp for more product details. - Power Market It is estimated that the US will increase its biomass power generation from current levels of 7GW annually to over 30GW annually by the year 2020. The driving forces behind this dramatic growth profile are the rising cost of power generation and transmission, the demand for low environmental impact power sources and the economic benefits to small to medium size businesses of on-site power generation. President Bush, speaking to Sacramento business leaders on 10/17/01 said, "Our country needs greater energy independence." Malahat offers a means to achieving that goal. - Sales and Marketing During the first phase of the Company's sales and marketing program, Malahat has targeted North America's greenhouse industry, which currently has in excess of 14,000 operations across the continent. With the potential to save even small greenhouse operators as much as 50% in annual power costs, the initial interest in Malahat's proprietary technology has been overwhelming. Malahat has already received commitments from North American greenhouse growers for 69 units. - Management and Growth Malahat has assembled a management team consisting of key individuals with qualifications and experience in power generation, mechanical engineering and software development. Leveraging a proprietary, clean power generation technology, Malahat is poised to become a leader in the field of low cost, on-site, biomass power generation. Go to www.malahatenergy.com/s/Management.asp for more details on the management team. Web site: www.malahatenergy.com/s/Home.asp More from Market Guide: Expanded Business Description - http://yahoo.marketguide.com/mgi/busidesc.asp?rt=busidesc&rn=A2 E4C ____________________________________ * Analyst Summary "Around $5 billion of tax credits are being extended to renewable sources...." Energy policy Not half bad May 17th 2001 From The Economist print edition Malahat's proprietary, patent pending BioFuel(TM) System enables it to deliver low cost power to high energy consumption industries. The BioFuel(TM) System converts biomass waste to produce a green renewable fuel replacement for natural gas yielding thermal and electrical energy at a fraction of the prevailing market price. Malahat's proprietary low cost distributed system with on site energy production offers clean power generation. It is a cost effective energy solution to the agricultural, horticultural and timber industries and to municipalities with abundant biodegradable waste resources for recycling. Malahat's initial foray into the greenhouse industry with its on-site power supply brings the benefit of substantially reduced energy costs with the added advantage of carbon dioxide enrichment, to meet the increasing demands for an alternate energy resource in the climate of escalating energy prices. Malahat is a development stage company that has completed its research and development with respect to its M500 biofuel system and is launching its commercial units for the M500 biofuel systems in the greenhouse industry. The Company was formed in May 2001 via a reverse acquisition with Sarenghetti Enterprises. Earlier in May 2001, Sarenghetti had acquired all the assets, liabilities and properties of Malahat Systems Corporation, a producer of thermal and electrical energy using biomass waste as fuel. Alternative energy is definitely a sector still in its infancy. But investors need to realize that the demand for the Company's products are real and necessary. Net profit projections show an impressive growth rate of: 1141.06% between FY 2002 and FY 2003 to $6,112,152, 386.95% between FY 2003 and FY 2004 to $29,763,139, 145.33% between FY 2004 and FY 2005 to $73,016,737 and 60.48% between FY 2005 and FY 2006 to $117,174,908. The associated Earnings Per Share will grow from $0.03 to $0.39 in year 2, to $1.92 in year 3, to $4.71 in year 4, and to $7.56 in year 5. Utilizing a conservative 9 to 1 Price to Earnings Ratio (applicable to Malahat's industry; Oil & Gas Operation), by the end of FY 2003 Malahat's share price forecasts in the $3.50 range, a 106% return on investment from the current share price and by the end of FY 2006 Malahat's share price forecasts in the $68.00 range, a 3900% return on investment from the current share price. We see Malahat's new technology as being best represented by the broader Energy sector. If we use this sector's Price to Earnings ratio of 16 to 1, Malahat is targeted for even more impressive share price forecasts: $6.24 for FY2003, 267% return $30.72 for FY2004, 1707% return $75.36 for FY2005, 4333% return $120.96 for FY2006, 7015% return Note: To meet the suggested target prices, the Company would have to trade at least at the Oil & Gas Operation Industry multiples and the Company would have to achieve earnings and revenue estimates provided by management in this report. A divergence either up or down from the projections could materially affect the target prices. ____________________________________ * Comparison of Alternate Energy Companies www.investorstool-kit.com/maht/mahtcomp.htm Within the alternate energy sector on the Comparisons of Alternate Energy Companies (www.investorstool-kit.com/maht/mahtcomp.htm), there are nine companies with annual sales between $5 million and $35 million. The average price to sales ratio of these companies is over 20. Estimated annual revenue for Malahat based upon existing lease commitments of 69 units is $10,350,000. The present market capitalization of Malahat at $1.70 per share is $26,350,000. Based on the anticipated commitments of 69 units, the price/sales ratio for Malahat Energy Corporation is 2.55 which represents a vastly substantial discount from its peer group. It would appear likely that as Malahat progresses with the execution of its business plan and the delivery of its first commercial units of M500 BioFuel(TM) systems to customers, early investors will be heavily rewarded by this large discount to market as the price sales ratio elevates to meet that of its peer group. On an assumption of a future share price of say, $4.00 per share, the forecasted price/sales ratio will then be at 6 which shall remain conservatively lower than the average price/sales ratio in excess of 20 in the alternate energy sector defined at www.investorstool-kit.com/maht/mahtcomp.htm. Additionally the anticipated sales revenue for Malahat does not take into account any additional revenue achieved through carbon credit trading or from the removal of biomass waste. Note: The information herein does not purport to be all-inclusive or to contain all of the information that a prospective recipient may desire. No representation or warranty is made as to the accuracy or completeness of any of the information contained herein. Neither the information herein nor its delivery to any prospective recipient, shall constitute an offer to sell or the solicitation of an offer to buy any securities of the Company, nor shall the information contained herein be construed to indicate that there has been no change in the affairs of Malahat Energy Corporation since the date hereof. ____________________________________ * Related Information - Summary Report - Publisher: Malahat Energy Corporation www.malahatenergy.com/i/pdf/summaryreport.pdf - The Business of Energy - Author: Tony Wanless www.malahatenergy.com/i/pdf/bizofenergy-tonywanless.pdf - Malahat Energy Corporation, Open House a Success - The Province Newspaper www.malahatenergy.com/s/Events.asp - Financial Radio Hour with Dr. David Wiles www.yesinternational.com/radio/malahat.html - Energy Excerpts www.malahatenergy.com/s/Excerpts.asp ____________________________________ * Recent News Oct 12, 2001 - Malahat Taps Wei for Commercialization Phase (http://biz.yahoo.com/bw/011012/120072_1.html) Oct 10, 2001 - Malahat Starts Commercialization (http://biz.yahoo.com/bw/011010/100029_1.html) Jun 6, 2001 - Malahat Energy Corporation Retains Yes International, Inc. (http://www.malahatenergy.com/s/News.asp?ReportID=24010) May 30, 2001 - Malahat Energy Corporation Announces New Listing (http://www.malahatenergy.com/s/News.asp?ReportID=23744) Nov 30, 2000 - Malahat Systems Develops Technology to Convert Waste into Fuel Gas (http://www.malahatenergy.com/s/News.asp?ReportID=22982) ____________________________________ * Contact Information Investor Relations: K. Williams 1-866-404-3311 ir@malahatenergy.com Visit the Company Website at www.malahatenergy.com/s/Home.asp ____________________________________ Please go to www.investorstool-kit.com/maht/ to see the complete The Investor Online Research Report. _____________________________________________________ IMPORTANT DISCLAIMER The Investor Online is an independent electronic publication providing information on selected public companies. 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