Ferroamp Elektronik
Ferroamp - Expect a soft Q1, but longer term looks better (ABG Sundal Collier)
2021-05-07 10:06
Q1’21 report due on Wednesday 19 May
We keep our estimates unchanged
Reiterate fair value range of SEK 86-128 per share
Q1’21 expectations and announced highlightsWe expect Ferroamp to deliver a Q1 report with sales of SEK 32m, up 72% y-o-y; 37% q-o-q, and EBIT to come in at SEK -9m (SEK -8m in Q1’20), for a margin of -28% (-44%). Since Q4’20, Ferroamp has announced several new partnerships and R&D activities. Among the highlights, Ferroamp is developing a Vehicle-to-Everything (V2X) solution with Polestar and CTEK, in order to enable parked cars to contribute with their battery capacity to reduce power peaks as well as to work as a power reserve. Besides that, Ferroamp has expanded its partnership with Senergia, Svea Solar and Elkedjan in the area of optimised energy usage solutions. Finally, to our understanding, being negatively affected by a lack of components, which may eventually affect its production, costs and our estimates in the following quarters.
Est. changed; ’20-‘25e sales CAGR of 69%, profits in ‘22e
We keep our estimates unchanged at this stage and continue to forecast a ’20-25e sales CAGR of c. 69%, taking sales from SEK 88m in ‘20 to SEK 1.2bn in ‘25e. We also expect the company to see operational profitability by ‘22e, improving from an EBIT of SEK -33m in ’20 to SEK 174m in ‘25e. All in all, we reiterate our positive view on Ferroamp and argue that the company’s technology solves several of the major issues with the electrification and the transition towards RES, through minimising conversion losses and by creating local DC grids.
Stock -11% L3M; reiterate fair value range of SEK 86-128
The stock is down 11% L3M. We reiterate our fair value range of SEK 86-128 per share, which is based on a range of ‘22e EV/sales exit multiples of 3.0-4.5x. Our primary valuation method is to compare Ferroamp with global solar and Nordic EV peers, with it at discounts of 43% and 15%, respectively, likely because Ferroamp lacks scale at the moment and is not profitable.
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