Investor Insight

Leveraging its long-history and reputation as a cable manufacturer, Energy Technologies’ (EGY) push to capitalize on the growing renewable energy sector through strategic global partnerships present a compelling investment opportunity.

Overview

Australia-based Energy Technologies (ASX:EGY) has a strong foothold in the manufacture and distribution of copper-insulated cables through its wholly owned subsidiary, Bambach Wires and Cables. Since its acquisition by Energy Technologies, the company has served as a cornerstone of the company’s operations. Founded in 1936, the company is the oldest cable manufacturer in Australia, and its extensive history underpins a reputation for reliability and quality. With a manufacturing facility in Rosedale, Victoria, and sales offices in New South Wales, Western Australia, and Victoria, the company provides comprehensive solutions tailored to the needs of critical sectors including infrastructure, renewable energy, defense and mining. Energy Technologies’ commitment to supporting Australian industry is reflected in its products. Over 90 percent of raw materials used for its cable products, like copper and plastic, are locally sourced.

The company’s Rosedale facility is a significant upgrade in its manufacturing capabilities. Situated on 122 acres, this location provides ample space for future expansion. The plant’s high level of automation supports production efficiency, processing up to 250 tonnes of copper monthly, with room for additional capacity if demand rises.

Strategic Review of Business Operations

Energy Technologies has focused on building strong partnerships to expand its product range and market reach. A key strategy for growth is to develop alliances with larger entities to enable Bambach to scale its distribution and provide specialized products to niche markets.

One such alliance is with Gantner Instruments, a full-service photovoltaic (PV) monitoring and control supplier for utility scale PV power plants. Under the distribution agreement with Gantner, Bambach supplies the renewable energy sector with certified, specialized low-voltage cables, connectors, weather stations and DC combiner boxes. These products are essential for delivering power from solar panels to inverters, which is a critical component in renewable energy infrastructure.

According to projections, the annual spending on utility-scale solar farms in Australia will reach AU$6 billion over the next decade. This growth is segmented into three phases:

1. Initial surge (2024 to 2026): AU$2.5 billion to $3.5 billion annually.
2. Accelerated growth (2027 to 2029): AU$3.5 billion to $5 billion annually.
3. Mature market phase (2030-2034): AU$4.5 billion to $6 billion annually.

Another critical partnership for Energy Technologies is with Tratos Group, a leading Italian cable manufacturer. This agreement has significantly expanded Energy Technologies’ product portfolio, allowing the company to offer medium- and high-voltage cables, as well as solutions for subsea transmission lines, offshore and onshore wind turbines, and mining operations. These additions bolster the company’s ability to address the growing demand in the renewable energy and mining sectors, while also diversifying its market reach.

Manufacturing and Purchased Sales Strategy

Energy Technologies employs a dual approach to sales through a combination of manufactured and purchased products. Its factory in Rosedale focuses on high-margin, specialized cable products that cater to sectors such as renewable energy, rail road, and infrastructure.

For FY25, the company is forecasting manufactured gross margins exceeding 23 percent. To complement its manufacturing capabilities, the company also engages in purchased sales by sourcing lower-margin products from rigorously vetted suppliers throughout the globe. This approach ensures Energy Technologies can meet market demand without overextending its manufacturing resources. Purchased sales for FY25 are projected to contribute an additional AU$6.7 million to the company’s revenue.

Company Highlights

• Energy Technologies produces low-, medium-, and high-voltage cables, with over 90 percent of its materials sourced locally in Australia.
• The company is strategically aligned with electrification and renewable energy trends, catering to infrastructure, solar, wind and mining industries.
• Key partnerships with Gantner Instruments and Tratos Group expand its product offerings for solar farms, wind turbines and subsea transmission lines.
• The company’s partnerships position it as a comprehensive supplier for large-scale renewable energy projects, projected to grow to AU$6 billion annually by 2034.