ForceField announces 5th LED lighting distribution agreement

By Steven Ralston, CFA

Yesterday, ForceField Energy (FNRG) announced the signing of a fifth LED lighting sub-distribution agreement, this one with On-Site Analysis, an automated fluids analysis company based in Palm Beach Gardens, Florida. This agreement is highly significant since it was entered into after a three-month commercial trial in which ForceField’s lighting products were installed at On-Site’s 15,000 square-foot warehouse, manufacturing and R&D facility in Marlborough, Massachusetts. During the test, the LED lighting products were measured and analyzed to confirm and quantify the cost benefits. The positive results motivated On-Site Analysis to purchase the installed LED lighting system and enter into this sub-distribution agreement with ForceField Energy.

ForceField’s strategic LED business plan involves aggressively introducing Lightsky’s LED products in the North American market by rapidly building a network of sub-distributors that can target large-scale customers (commercial, industrial, institutional and governmental) that would benefit from upgrading to LED lighting. An ideal client is a multi-location entity where economic evaluations strongly influence the decision-making process. The rationale to transition to LED lighting products is compelling considering the relatively short payback period (under two years) and long-term cost benefits. In the United States, the LED lighting market is growing at a 32% compound growth rate due to the lower electrical power consumption and longer lives of LED lamps, along with government regulation designed to phase out inefficient incandescent light bulbs.

The prior four sub-distribution deals were announced between September 2012 and February 2013. Initially, ForceField retained the services of Global Resource Group, Inc. to help generate immediate interest in Lightsky’s LED product line. Thus far, Global Resource Group has negotiated LED trials with a private hospital group in the Midwest and the Gold Rush Gaming Room, LLC, in Texas. In October 2012, ForceField entered into a strategic alliance with Commonwealth Energy Group, LLC, an energy consulting firm that can offer to its customers not only the turnkey LED lighting solutions that utilize Lightsky products, but also the energy audits required to secure tax savings, rebates and/or grants. In January 2013, ForceField entered into a distribution agreement with Gonneville, Inc. for both Lightsky’s LED products and TransPacific Energy’s Organic Rankin Cycle (ORC) systems. And in February, a 5-year distribution agreement for both LED and ORC technology products was signed with DEK International, a global supplier of to the gaming industry with a core market presence in Latin America.

Formerly SunSi Energies, ForceField Energy is a manufacturer, distributor and licensee of green energy products and systems, including 1) ORC systems through its controlling interest of TransPacific Energy, 2) LED lighting though a five-year North American distribution agreement sell and distribute LED lighting products manufactured by Shanghai Lightsky Optoelectronics Technology Co., Ltd. (aka Lightsky) and 3) the production and distribution of  trichlorosilane (TCS), an critical component in the process of manufacturing solar cells.

Utilizing our benchmark valuation methodology, we expect ForceField’s stock to trade in the middle of the top quartile of our estimated valuation range of 1.1 and 3.2 times normalized sales, which projects at price target of $6.60.

A copy of the latest research report can be downloaded here >> ForceField Energy Report 

Please visit SCR.Zacks.com for additional information on our research and coverage universe, and Subscribe to receive our articles and reports emailed directly to you each morning.