Enevis bets on high-tech LEDs to power turnaround storyMay 21, 2019
One of the oldest listed companies on the ASX, Enevis, is betting on smart lighting technology that can boost agricultural production as a new growth engine for the business, as management tries to return the company to its glory days.
The LumiGrow technology, for which audio-visual and lighting company Enevis secured an exclusive supply agreement with its US-based parent company this month, is designed to speed up the growth and improve the quality of crops, such as tomatoes, eggplants, cucumbers and cannabis, by controlling all of the light characteristics and matching them perfectly to the crop type.
Unlike other LED installations, LumiGrow’s technology is coupled with cloud-based software that utilises artificial intelligence to constantly optimise the lighting on the crop, be it the amount or the spectrum.
The lighting system, which is already used by 150 customers in North America, will be deployed in the largest enclosed glasshouse in the southern hemisphere, being established by Nectar Farms in regional Victoria near Joel Joel. In the first instance it will be used to grow tomatoes.
Nectar Farms chief executive Stephen Sasse said the company had done a global search for the best LED lighting technology and he expected it to have a notable impact on taste of the produce and the yield.
“The plant will be getting the perfect amount of light for each stage of development,” Mr Sasse said. “This gives you powerful control over the shelf life, taste and quality. Even some diseases can be managed.
“By adding the lights to the cloud glasshouse we’re looking to get somewhere between 25 to 35 per cent yield increase.”
Enevis will manage the installation and servicing of the LumiGrow lights at the glasshouse, which Mr Sasse hoped would generate its first harvest by Christmas next year.
Enevis, formerly known as Stokes, dates back to 1856 when the company was started by English die-sinker Thomas Stokes, who had come to Australia during the gold-rush era. In the early days, the business produced metals, tokens, buttons and silverware, before shifting into manufacturing appliance parts.
We’re in a really positive place now and it’s all about the future. The past is the past.
— Peter Jinks, Enevis chief executive
In 2012, chief executive Peter Jinks joined the business as an investor and was appointed to the board alongside his brother Greg. The two realised shortly after joining that the company’s appliance part manufacturing business did not have a strong future and it pivoted once again into audio-visual installations and supplying LED lighting to large commercial projects.
The company has been in a turnaround period for the past two years, following a $2 million project with an electrical contractor working on the Simonds Stadium in Geelong where Enevis delivered services such as audio-visual equipment, broadcasting and digital signage. The company told the Australian Securities Exchange it was paid less than half it was owed at the time.
Enevis has been trading at its lowest point since 2012 in the low 20¢ range, giving it a market capitalisation of about $15 million.
Mr Jinks, who developed his previous business, KLM Group, to $160 million in revenue before selling it to Programmed Maintenance for $28 million, said he was confident he could return Enevis to its glory days.
“We’re in a really positive place now and it’s all about the future. The past is in the past,” he said.
“We’ve had to do a lot of hard work to be where we are today, but we have a lot of support from existing shareholders to ensure that we’re a strong and growing business into the future.
“Greg and I have been here before and we’ll do it again.”
In its half-year results, Enevis recorded a 55.8 per cent jump in revenue to $19.9 million and a modest net profit of $94,679, compared to a $2.28 million in the previous corresponding period.
While the company has maintained strong revenue growth in the past few years, its costs have ballooned. In the first half of 2017, it reported $10 million in expenses, while in the most recent period this had inflated to $19.8 million, with cost of sales the largest cost.
Mr Jinks said it was too early to know how much revenue the LumiGrow technology would generate for Enevis, but many deals were in the pipeline.
“LumiGrow have passed a number of people onto us who contacted them from this region. There’s a tobacco operation in Fiji, a lab in Queensland and we also have a cannabis grower in New Zealand,” he said.