The Tiny Cleantech Company that Could Dethrone Beyond Meat

Source: Matt Badiali for Streetwise Reports   06/15/2021

Independent financial analyst Matt Badiali profiles Bion Environmental Technologies and explains why he finds the cleantech company’s stock’s risk to reward ratio “incredibly appealing.”

“Are you hiring?”

I was only half kidding when I said it. It was about thirty minutes into a simple company meeting. I do a couple of them a week. A company will go through its slide deck with me and pitch me its value.

I rarely choose to write about them. I have never asked for a job before.

But this story was so compelling, I know it will be huge. And while I didn’t get a job, I’ll tell you what compelled me to ask.

It all starts with water.

“The risk to reward ratio on this stock looks incredibly appealing.”

Water quality is a huge issue in the U.S. According to a 2008 study by the Kansas State University, excess nutrient pollution in water cost the U.S. at least $4.3 billion per year.

Most of that pollution comes in the form of animal waste. You see, most farmers and ranchers still get rid of the waste in the same wayÖthey spread it for fertilizer. That’s the smell of spring in central Pennsylvania, where I grew upómanure.

Runoff carries that waste in to streams and on into coastal waters.

It is the single largest ongoing threat to the Chesapeake Bay. Farmers spread about the 44 million tons of manure on fields in the catchment basin that feeds the bay every year. That puts the watershed in the top 10% for manure-related nitrogen runoff.

The difficult part of addressing the problem was making it a business. You see, most environmental approaches require a punitive action. The government levies a fine or a tax to pay for the cleanup.

That’s a Lose/Lose proposition. The company doing the work barely survives and rarely turns a profit.

The way to succeed is to figure out how to turn the clean up into a revenue stream. If you can get folks to pay you to take it and turn that waste into something other people want, you have a business.

That’s what Bion Environmental Technologies Inc. (BNET:OTCQB) did.

Bion is a $52.4 million cleantech company focused on turning manure into cash flows. The livestock waste industry is a huge addressable market for such a small company. And if it succeeds, it won’t be small for long.

Its process could revolutionize agriculture and water quality.

“Bion is a $52.4 million cleantech company focused on turning manure into cash flows.”

That’s a lofty goal. But when I reviewed the company’s reports, the process blew me away. That’s why I asked for a job. Because I think it can do it. And if it does, it’s going to be huge.

If you go back a few years, Bion’s annual reports tell the story of a company that had to make a pivot. They moved away from the cleaning water on government funding model. It just wasn’t working.

It moved toward the revenue generating business model. It was a slog, but it moved forward each year.

The big leap forward came when it figured out how to take animal waste and produce both biogas (green energy) and a pelletized nitrogen fertilizer (organic farming gold) from animal waste.

It blew me away. Bion’s patented technology cleans the water and recovers resources from the waste.

It can turn manure into a revenue stream at a low cost. The company touts its technology as a “cleantech makeover” for large-scale livestock producers.

Here’s what the company says:

Bion’s patented third-generation technology was designed to largely eliminate the environmental impacts of large-scale livestock production and deliver a USDA-certified sustainable product to the consumer.

The platform simultaneously recovers high-value coproducts and renewable energy that increase revenues. Bion’s 3G tech platform can provide a pathway to true economic and environmental sustainability with ‘win-win’ benefits for at least a premium sector of the $200 billion livestock industry, the environment, and the consumer.

That’s the key to a successful company in cleantech. Find a giant problem worth hundreds of billions of dollars and fix it in a way that generates profits. If that was all Bion could do, I’d still love the companyÖbut there’s more.

The company plans to go beyond just cleaning up other producers’ waste. It plans to joint venture and support a brand of sustainable livestockóbeef and pork. These animals can be raised sustainably, from birth to harvest.

The timing of this couldn’t be better. New products like Beyond Meat (BYND:NASDAQ) offer plant-based proteins that challenge the livestock industry.

Beyond Meat is an $8.4 billion company that sells plant “meat” for $6.25 per pound. In comparison, a pound of ground beef costs around $3.00 per pound. That means consumers will pay more than twice the price for a sustainable alternative to factory-farmed meat.

It’s a theme supported by investors. In 2020, alternative meat producer Impossible Foods raised over $700 million from shareholders to get its products into fast food chains like Subway and KFC.

That’s where the brand that Bion supports can create a huge market for consumers looking to eat sustainably. While Beyond Meat made a big sustainability splash when it came out, it still doesn’t appeal to most folks. However, a sustainable beef hamburger would.

In the U.S., fast food chains sell about 6.4 billion beef burgers per year.

The market is clamoring for it. Recently, fast food chain The Wendy’s Company committed to pursue a “science-based target” for agricultural practices related to its supply chain. That’s in addition to its partnerships with the U.S. Roundtable for Sustainable Beef and the Canadian Roundtable for Sustainable Beef.

There is a need for sustainable beef right now. That’s a huge opportunity for Bion’s technology. And the rewards are enormous, if Bion can follow through on its model.

They are getting help. There is a bipartisan bill before Congress right now, the Agriculture Environmental Stewardship Act. In it is a provision for a 30% investment tax credit for nutrient recovery technologies and biogas recovery technologies. I’ll be watching it closely because it could be a springboard for Bion’s implementation plans.

The risk to reward ratio on this stock looks incredibly appealing. If you are in the market for a small cleantech company with multi-billion-dollar potential, definitely look at Bion Environmental Technologies.

Sincerely,

–Matt Badiali

Reach Matt Badiali at www.mattbadiali.net.

Matt Badiali is a geologist and independent financial analyst. He spent fifteen years researching and writing about great investments inside the natural resources sectors. He can be reached at www.mattbadiali.net.

Streetwise Reports Disclosure:
1) Matt Badiali: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector.
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