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

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Original-Research: LION E-Mobility AG - from NuWays AG

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: 09.07.2024

Target price: EUR 7.00

Last rating change:

Analyst: Christian Sandherr

Successful AMG // Surprisingly strong JV performance

Topic: During the last weeks, LION published its FY23 annual report and

hosted its AGM. Here are the key takeaways:

FY23 marked a milestone as the company transformed itself into an automated

manufacturer of high-quality battery packs for mobility and storage

solutions through the acquisition of the former BMW i3 battery pack

production lines. The current set-up offers a production capacity of up to

40k battery packs p.a. with a revenue potential of some EUR 200m by 2028.

Despite the transformation, which was completed by the end of May 2023,

LION's EBITDA came in break-even with roughly EUR 56m sales (~50% from

pre-produced packs); op. cash flow stood at EUR 2.8m. Worth highlighting, TV

SD Battery Testing (LION holds a 30% in this JV) reported particularly

strong FY23 results with sales up 41% yoy (EUR 16.1m) and an 18.9% EBIT

margin; EUR 660k P&L contribution to LION. Thanks to a structurally growing

demand for battery testing capacities, TV SD Battery Testing looks set to

continue growing at roughly 15% p.a. during the mid-term.

FY24 financial targets confirmed. Management expects FY24 sales to the tune

of EUR 60-65 and EUR 0.5-1m EBITDA. Importantly, the current fix cost base

should only slightly increase going forward (mainly due to ramping sales

efforts, i.e. growing sales headcount and trade shows), providing plenty of

room for operating leverage as sales increase.

Further, LION remains on track to launch an updated product portfolio

during H2, featuring a higher energy density NMC pack as well as a LFP

solution (both enabled by the SVOLT partnership). Especially the latter

should enable LION to better benefit from the strongly growing stationary

storage market.

Light battery remains an attractive option. With its immersion cooled pack,

LION would add a highperformance pack, to be used in hyper cars. The

project is developing as planned and LION expects 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).

We confirm our BUY rating with an unchanged EUR 7 PT based on a

sum-of-the-parts valuation, whereas EUR 6.50 are stemming from the battery

pack manufacturing business and EUR 0.50 from the TV SD JV.

You can download the research here:

http://www.more-ir.de/d/30165.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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The result of this research does not constitute investment advice

or an invitation to conclude certain stock exchange transactions.

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