Delorean (ASX:DEL) debuts on ASX, already posting profits

The business that converts rubbish to energy is hoping to weave similar magic for investors' money too. Read how.

| More on:
light bulb surrounded by green hydrogen and renewable energy icons

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A company that earns revenue both from its customers and suppliers is listing on the ASX on Monday.

Delorean Corporation Limited (ASX: DEL) has raised $14 million through an initial public offering, with shares priced at 20 cents.

The IPO prospectus showed Delorean made a net profit after tax of $2.6 million in the last financial year.

Managing director and co-founder Joe OIiver told The Motley Fool that the business has already been turning a profit for 5 years.

"Our forecast is for net profit to match or better what we've done in financial year 2021."

So what exactly does this Perth company do?

Turning rubbish into energy

Delorean is in the renewable energy industry, currently selling power to retail and wholesale clients under the CleanTech Energy brand.

The company aims to also become an energy producer by building its own bioenergy generation infrastructure. 

Its generators will receive organic waste that would otherwise end up in landfill, then convert it into electricity and gas.

"The capital from the IPO allows us to directly invest into shovel-ready projects in the Delorean pipeline and continue delivering on our growth strategy," said Oliver.

The company already has one operational power generator in Western Australia, which has been running since 2015. 

There are plants currently under construction in South Australia and New Zealand. Another two sites in South Australia and Victoria will have their construction kick-started with the new money.

This ambitious vertical integration is how the business can run in the black now, but also have growth immediate prospects.

"As we shift into asset ownership, we'll be augmenting [the retail business] with newly based revenues… from these infrastructure assets," Oliver said.

"Our aspiration is to move to a fast growth company… and ultimately be a payer of dividends as we roll out these infrastructure assets." 

Revenue from both sides of supply chain

Renewable energy is expected to receive positive treatment from all levels of government in the coming years.

"We've got a history of success and proven our capabilities in what is a high growth market with favourable regulatory conditions as well as environmental and sustainability benefits," said Oliver.

The new bioenergy generators also have a unique revenue model where money is coming from both suppliers and customers.

The plants will charge a "gate fee" to parties that want to offload organic waste. Then the converted energy will be sold off to wholesale and retail clients.

"We work with the logistics companies that are picking up waste. We work direct with food manufacturers, councils — the providers of organic waste," executive chair and co-founder Hamish Jolly told The Motley Fool.

"There is a financial incentive in that there's not a landfill levy attached to [supplying Delorean], depending on the state."

Delorean will start its life on the ASX with a market capitalisation of $35.9 million.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on IPOs

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
IPOs

Is Guzman y Gomez stock too expensive?

Should you stay clear of this hot IPO?

Read more »

three young women smile as they hold up their loaded orn chips as they sit in front of a large bowl of dip.
IPOs

Who is investing in the Guzman y Gomez IPO?

Some substantial investors are planning to buy GYG shares.

Read more »

A laughing woman holds her hands up, indicating a share price racing higher ahead of a trading halt on the ASX market
IPOs

Life 360 shares halted ahead of Nasdaq IPO

Life360 requested a trading halt today as it prepares for an announcement.

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
IPOs

Should you buy shares in Guzman y Gomez when it lists on the ASX?

Guzman y Gomez's IPO will be a blockbuster ASX event.

Read more »

IPO written in yellow and stuck in the air.
IPOs

Guzman y Gomez (GYG) is set for an ASX IPO. Here's what we already know

The Mexican food chain has revealed some spicy IPO details.

Read more »

Man with rocket wings which have flames coming out of them.
IPOs

The newest ASX IPO stock just rocketed 50%

This IPO has certainly been a success on day one.

Read more »

IPO written in circles with a man holding a smartphone and a laptop open.
IPOs

Could this rumoured ASX IPO become a billion-dollar takeover target?

There might be a second chance to invest in a similar company to the one set to depart the ASX…

Read more »

IPO written in white with increasing arrows and a man holding out his hand.
IPOs

Reddit stock soars 48% on debut! Will the ASX IPO market heat up again?

It was a great first day for Reddit.

Read more »