In Brief: ikeGPS, Provaris & Propel Funeral

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This story features IKEGPS GROUP LIMITED, and other companies.
For more info SHARE ANALYSIS: IKE

This week, brokers assess small-cap opportunities across US utilities exposure, alternative energy and carbon reduction, and the funeral services sector.

• US grid spending drives structural growth for ikeGPS
• Provaris: advancing hydrogen and CO2 projects
• Propel Funeral Partners positioned for growth

By Mark Woodruff

Given recent turbulence in global equity markets, this week’s quote comes from the Stoic philosopher and Roman Emperor Marcus Aurelius:

“You have power over your mind, not outside events. Realise this, and you will find strength.”

US grid spending drives structural growth for ikeGPS

Accounting firm PWC estimates around US$2trn will be invested over the next decade in expanding US grid infrastructure capacity, based on utility and telecom capex forecasts. 

Zooming in further, management at American-based ikeGPS Group ((IKE)), market cap $141m, puts the spotlight on utility poles specifically, estimating roughly US$345bn in spending over the next five years. 

Such expenditure is being driven by an aging asset base, notes Canaccord Genuity, with around 25m-35m electricity poles (out of roughly 220m across the region) expected to reach the end of their useful life.

These will all need to be replaced or reinforced by 2035.

With more than 450 customers, including eight of the ten largest US investor-owned utilities, the market is clearly validating ikeGPS’s software and data analytics, reinforcing the group’s position as a leading provider of best-in-class technology solutions.

In fact, the group has become the de facto standard for pole structural analysis in North America, the broker reports, aided by flagship product PoleForeman.

Released in 2024, this software enables engineering teams to model complex joint-use structures and assess compliance with the National Electrical Safety Code (NESC) and Occupational Safety and Health Administration (OSHA) standards.

Design solutions are also enabled for grid upgrades and communications attachments, with integration into IKE Office Pro for end-to-end workflows.

The core business model is built on a land-and-expand strategy across two key revenue streams: platform subscriptions and usage-based transactions, the broker observes.

The product suite targets the digitisation needs of North America’s more than 3,000 electric utilities and around 220m distribution assets, including poles and underground wiring.

Highlighting future growth potential, the group’s addressable market in North America includes around 6,200 companies, more than 75% of which do not use third-party software.

Canaccord highlights ikeGPS is only 20% penetrated on a per-seat basis within existing customers, indicating scope for growth through both new customer wins and cross-sell and upsell opportunities.

Attractive subscription unit economics are noted, with annual recurring revenue (ARR) contributing 70% of total revenue, high gross margins above 90%, and churn below 4%.

Canaccord also highlights potential to double average revenue per user (ARPU) from new product modules targeted for 2027.

Elsewhere, transaction-based revenue accounts for 20% of revenue with 30% gross margins, while hardware and training contribute 10% with around 70% gross margins.

Canaccord initiates research coverage with a Buy rating and $1.30 target, suggesting material upside to yesterday’s 73 cents closing price.

Provaris advancing hydrogen and CO2 project commercialisation

Provaris Energy ((PV1)), market cap circa $10m, provides leveraged exposure to the global transition toward alternative energy and carbon reduction.

The company is progressing its proprietary compressed H2 storage and transport tank and executing its Liquefied CO2 tank development program.

Narrowing the timing gap with hydrogen opportunities, commercialisation of the CO2 development model has progressed materially, an important strategic outcome according to Research as a Service (RaaS).

Management is currently advancing fabrication, testing and Class Approval of the hydrogen tank prototype, while progressing its CO2 business through the Front-End Engineering and Design (FEED) phase.

Stage 2 for the CO2 business is expected to commence soon, targeting completion by June 30, with structural design to be completed by around mid-year.

Provaris has entered into a memorandum of understanding with Himile Heavy Equipment Co. Ltd to assess the feasibility and cost of fabricating LCO2 tanks at the company’s Rushan facilities in Shandong province. The company forms part of the broader Himile Group, a large Chinese industrial manufacturer.

For the tank program, the analyst points out a successful outcome could materially improve the economics of the hydrogen supply chain and the liquefied CO2 carrier and storage business, with the core proposition centred on transporting more at lower cost.

The analyst anticipates economic potential across both business streams will crystallise through 2026, with several key deliverables set to support “unconditional and bankable project commitments” with reputable industry partners.

Following a $1.325m placement earlier this month, the analyst suggests the company is funded through key Class Approval milestones for both hydrogen and CO2 streams and toward a Final Investment Decision.

RaaS identifies Class Approval as the key share price catalyst, as it would support a Final Investment Decision on an initial hydrogen tank development project.

The opportunity here is considered effectively open-ended, underpinned by large addressable markets for clean energy and carbon capture.

After adjusting for the equity raise at $0.01 cent, the midpoint of Research as a Service’s valuation is $13 cents, suggesting significant upside to yesterday’s $0.009 share price.

Propel Funeral Partners positioned for growth

Seeking “defensive growth for uncertain times”, Jarden recently initiated research coverage on Propel Funeral Partners with an Overweight rating and a 12-month target of $5.00.

This compares to the $4.14 closing share price in yesterday’s session.

Elevated ‘excess deaths’ over FY19-23 have now unwound, with deaths declining by around -1% per annum across FY24-25, the analysts explain, creating a headwind for the company.

Separately, a slowdown in M&A activity by management has also contributed to the more challenging recent backdrop.

Now, in Propel’s favour, demographic trends are expected to drive growth in deaths over time, and the analysts believe industry volumes are well placed to return to around 2% yearly growth.

In addition, Jarden believes this number two player can strive for 17% market share, up from around 10%, approaching the 21% of main competitor InvoCare, and deliver an earnings compound annual growth rate (CAGR) of more than 11%.

M&A remains central to Jarden’s investment thesis on Propel, with around -$38m per year deployed since the 2017 IPO, although activity has slowed to -$13m in FY25 and -$4m in 1H26.

The M&A pipeline remains robust, according to management, with multiple active discussions, including several at an advanced stage.

Explaining the recent lull, the broker notes many potential deals are circumstantial, take time to execute, and are often outside Propel’s control.

The overall funeral market is considered sufficiently fragmented for multiple players to continue growing through acquisitions.

Jarden cautions a near-term overhang remains due to inflated consensus forecasts, while a lack of M&A and/or ongoing volume share loss represent key medium-term risks.

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