Original-Research: LION E-Mobility AG (von NuWays AG): BUY

Classification of NuWays AG to LION E-Mobility AG

Company Name:	LION E-Mobility AG
ISIN:	CH0560888270
Reason for the research:	Update
Recommendation:	BUY
from:	05.08.2024
Target price:	EUR 3.60
Last rating change:
Analyst:	Christian Sandherr

Weak H1 figures but progress on strategic topics; chg. 

Following a particularly weak Q1 with a mere € 1.2m sales, Q2 showed strong sequential improvements with € 4.8m; € 6.1m sales in H1. However, this figure is still somewhat disappointing. While demand from mobility customers remains decent, storage demand has been particularly weak. This has been the result of battery pack manufacturers and resellers of used packs aggressively clearing their inventories (due to a weaker automotive demand) by selling their products to the storage industry. As a result of the weak top-line, EBITDA came in at a negative € 2.1m. H1 EBITDA stands at € -4.7m.

FY24 guidance restated. As a result of the weak start into the year, management has revised its FY24 guidance, now expecting sales of up to € 42m sales and a slightly negative EBITDA (old: € 60-65 and € 0.5-1m EBITDA; eNuW old: € 61m sales and EBITDA break-even).

Potential divestment of its 30% stake in TÜV SÜD Battery Testing to shore up additional liquidity. Mind you, in FY23 TÜV SÜD Battery Testing reported sales up 41% yoy (€ 16.1m) and an 18.9% EBIT margin. Thanks to a structurally growing demand for battery testing capacities, TÜV SÜD Battery Testing looks set to continue growing at roughly 15% p.a. during the mid-term. In light of this, LION should be able to receive a mid-single-digit €m amount for its stake, in our view.

Light battery remains an attractive option. Its immersion cooled battery pack is currently being tracktested by a German premium OEM. So far, the preliminary results are quite promising: vehicles with battery voltages of 400 and 800 Volts showed performance that was 30% above the current market standard. Assuming the tests progress as planned, LION should expect a first request for quotations until the end of the year. A positive outcome would notably increase the likelihood of it becoming a notably sales driver during the mid-term (currently not part of our revenue model).

Prominent customer win. LION announced to begin to supply battery modules as spare parts for delivery vans of Deutsche Post DHL going forward. While we expect no significant P&L impact in the shortterm, this underpins the company's products quality and ability to offer customized solutions for demanding customers.

We reduce our PT to € 3.6 (based on SOTP) per share as we cut our sales estimates but reiterate out BUY rating. Roughly € 0.5 per share are stemming from the TÜV SÜD Battery Testing JV.

You can download the research here: http://www.more-ir.de/d/30359.pdf
For additional information visit our website: www.nuways-ag.com/research

Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
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