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A small company with big potential is set to clean up
by Timon Day
Big-time management running a stock market tiddler is not always a recipe for success. Yet Sweden-based Gas Turbine Efficiency, valued at all of £20 million could be on the cusp of the sort of rapid-growth phase that promises significant returns for its patient shareholders.
Ex-General Electric dynamo Stephen Zwolinski was headhunted to run this eco-friendly firm back in in 2005 by 25% stake owner EIG Venture Capital, and he has since assembled a team of management great and good, including leading scientists. Sales have grown from £1.3 million in 2004 to £8 million last year, should double to £16 million this year and then rise 50% to £23 million in 2009.
Gas Turbine is in a market sweetspot. Its technology improves fuel efficiencies and lowers emissions and maintenance costs for gas turbine engines powering planes and industrial plant. Its clients are a rollcall of global leaders such as General Electric, Siemens, Rolls-Royce, Pratt & Whitney and Caterpillar.
Broker Dawnay Day says Gas Turbine stands out among the new breed of environmental companies. It is not dedicated to alternative energy, but cleans up part of the much larger fossil fuel market. Gas Turbine has half a dozen patents, with many more expected, covering cleaning and maintaining of turbines.
Airlines such as SAS report 1% fuel savings, and recent customer win Singapore Airlines expects to save $15 million and reduce CO2 emissions by £128 million a year. Washing a jumbo jet engine, using water that is then recycled, costs $36,000 and saves $164,000 for a payback of three months.
Cleaning a 175 MW power plant turbine engine costs $350,000 and saves $940,000 a year in fuel for a four-month payback.
Gas Turbine has also moved into advanced fuel and combustion to provide a complete set of solutions for turbines. The total value of the market is around $8 billion, growing at 10% a year.
Under Kyoto Protocol, participants have to cut emissions by 5.3% of the baseline level of 1990 by 2012 and more in the EU. Airlines and power generators are desperate to implement every solution.
The Gas Turbine cleaning process uses a high-pressure, atomised direction injection washing technique. This is delivered through special tools and nozzles adapted for different engines. The wash, though abrasive, uses no detergents or solvents minimising corrosion.
Dawnay expects Gas Turbine to make a maiden profit this year and deliver EPS of 0.8p, jumping to 3.6p in 2009 and 5p in 2010, which would slash the PE to just seven in a couple of years.