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LPE Looks to be 2023’s Turnaround Stock

28 April 2023 10:23
ASX: LPE

Following a difficult 2022, strata-provider Locality Planning Energy looks to be the turnaround stock of 2023, with the Company’s customer receipts hitting $14.3 million dollars as their strategic theme of “creating value powering strata communities” delivers in spades.

This customer receipt growth represents a 12 per cent increase on the last quarter, with the Company delivering its third consecutive positive operating cashflow quarter, growing 35 per cent to $2.5 million dollars.

This growth looks set to continue, with the hard work of the Company’s sales team also forecasted to pay off this financial year, by bringing 3,200 new customers to LPE’s network which currently stands at over 28 thousand customers.

Shift in Strategy

LPE’s recent success can be traced back to a significant reorganisation the Company undertook last year, which retired all its debt and brought $17.8 million dollars up to the front after the Company secured its hedge position.

The reorganisation gave the Company the working capital to advance its strata business base and develop the growth potential of its vertically integrated renewable assets, allowing the Company to bring in $1.8m in positive cash flow and begin down the road of hitting a $40 million revenue guidance for this financial year.

A key part of LPE’s new strategy was to keep operating costs low, with the Company able to drop costs by 16 per cent immediately following the restructure, and the Company revealing that employee, admin and corporate costs continue to remain low and in line with the previous quarter.

Pushing towards profitability

The Company said it is set to significantly strengthen its cash position during the next quarter as it remains on track to pay off a $5 million dollar loan owed to Bundaberg Biohub, which will allow LPE to accelerate the expansion of its core business and continue its transition to profitability by FY24.

“Delivering positive operating cashflow for the third consecutive quarter – the Board’s key performance metric post-FY22’s reorganisation – verifies LPE is on the right trajectory to transition to profitably from FY24 onwards. Looking forward, with the embedded customer network set to reach over 31,400 during FY24,” Chairman Justin Pettett said.

“Add in a potential acquisition uplift, and operating cost optimisation kicking in, the key drivers are now in place to create significant value for shareholders.”

LPE’s Australian Stock Exchange-listed share price is trading at 5.6c (9.19 am UTC+ 8 hours).

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