Carmanah Technologies: It Lights the Way

It lights the way in solar-powered LED products for marine, railway and roadway industries

Friday, September 6, 2002

Carmanah Technologies Corp. (CMH-TSX, $0.53, 604-684-2181, www.carmanah.com) is a Victoria, B.C.-based company which designs, manufactures and supplies solar powered LED (light emitting diode) ligting solutions to the marine, railway, transit and roadway markets.

The company has distributors in over 80 countries with more than 44,000 units installed since its inception in 1996. The company should have 2002 sales of about $6.4 million, and see its first profitable year.

Carmanah Technologies' products originally solved a maintenance issue in the marine market, as coast guards, port authorities and others were spending significant resources on marine lighting maintenance.

Servicing marine buoys utilizes manpower, boats and fuel. Carmanah's solar-powered LED lights are virtually maintenance-free for the duration of their lifespan.

It costs an estimated US$50,000 per year to maintain each big channel buoy in American waters. Maintenance on Carmanah's products is virtually zero.

The company has also been able to transfer its technology to other industries where solar-powered lighting is an asset, two of which are railways and roadways.

The ability to program flashing patterns and times of operation on these products make them ideal low-maintenance solutions for roadway signs, including school crossings and bus stops, and railway applications, such as safety lights or track guidance lights.

Sales are coming in from a variety of sources, from major contracts with Canada's Coast Guard, to individual unit sales from Carmanah's web site for dock owners or other recreational projects.

Website sales have grown in two years from zero to over 20 percent of sales. The company has also started to diversify geographically, making significant progress in tapping the public tranportation market in Europe.

The company recently won a contract to provide marine navigation lights for the Marine Deparment of the Hong Knog Special Administrative Region (HKSAR). The intial installation contract is worth $50,000, and will have 38 units operational by the end of August 2002.

HKSAR has expressed an intention to replace all current low-range (up to three nautical miles) lighting with Carmanah's products once the performance and reliability of these initial units are proven. Within the port of Hong Kong, HKSAR manages over 500 channel market buoys and 2,200 mooring buoys.

Carmanah's biggest push into the public transportaion markets is in the U.K.

The company's inforamtion and sinalling system is a completely self-contained transit stop system. The solar-powered system contains a push-button beacon (which signals an upcoming bus to stop), an illuminated schedule case at bus stops and newer products will include security lighting.

There are currently 50 units in field trials across the U.K. The company is optimistic that successful trials will result in orders for at least part of the 12,000 bus stops in the country.

Carmanah's roadway lights offer several advantages over standard lighting products: no external wiring, no trenching or disruption of traddic, and no maintenance for up to five years.

The balance sheet is not a concern at present, as Carmanah has $1.17 million in cash and minimal debt. The company is also on pace for revenues of roughly $6.4 million in 2002, with net earnings of approximately $0.01 per share.

We recommend Carmanah shares as a buy for investors seeking growth, who are familiar with relatively illiquid emerging businesses. Our 12-month target price is $1.20 per share.