JDA with smartphone OEM signed

Intelligent Energy Holdings 9 February 2016 ADR Flash

Intelligent Energy Holdings

JDA with smartphone OEM signed

Contract award

Alternative energy

9 February 2016

Price

US$2.21*

Market cap

US$83m

*priced as at 8 February 2016

*underlying GBP price converted at US$1.44

ADR/Ord conversion ratio 1:5

Net cash ($m) at 30 September 2015 (including short-term deposits)

34.8

ADRs in issue

37.6

ADR code

INGYY

ADR exchange

OTC

Underlying exchange

LSE

Depository

BNYM

Business description

Intelligent Energy develops efficient hydrogen fuel cell power systems for the distributed power and generation markets (DP&G division), global automotive (Motive division) and consumer electronics (CE division) markets.

Analysts

Anne Margaret Crow

+44 (0)20 3077 5700

Roger Johnston

+44 (0)20 3077 5722

Intelligent Energy Holdings is a research client of Edison Investment Research Limited

Intelligent Energy (IEH) has signed a joint development agreement (JDA) with an emerging smartphone OEM. The announcement shows the group is making rapid progress on executing its operational strategy while management proceeds with completing its financing programme. In January, management noted that good progress was being made towards completing both phases of the financing programme by the end of calendar Q116, as originally indicated.

ADR research

Year end

Revenue
($m)

EBITDA*
($m)

PTP*
($m)

EPADR*
($)

DPADR
($)

P/E
(x)

09/14

19.6

(75.5)

(83.5)

(2.2)

0.0

N/A

09/15

112.5

(70.3)

(75.1)

(1.6)

0.0

N/A

09/16e

226.5

(35.4)

(73.8)

(1.8)

0.0

N/A

09/17e

548.1

88.5

17.0

0.6

0.0

3.7

Source: Edison Investment Research. Note: Converted at £1/US$1.44. Dividend yield excludes withholding tax. Investors should consult their tax advisor regarding the application of any domestic and foreign tax laws.

IEH announced a preliminary agreement with an emerging smartphone OEM at end November, so the rapidity with which this has converted to a full JDA indicates the strength of customer interest. This tailored development and integration programme builds on the prototype demonstrated in August 2015, which showed that IEH’s fuel cell technologies could be embedded in cell phone and tablet hardware without reducing any of the functionality or battery life of the devices. The JDA, which is non-exclusive, has a total contract value of £5.25m ($7.6m). If successful, this JDA may be followed by a licensing agreement. We discussed the potential value of a licensing agreement in the smartphone space in December.

The contract underpins our estimates for the Consumer Electronics division, so we leave our group financial estimates and valuation unchanged. This is against the backdrop of a visible share price drop fuelled by concerns about financing. Management expects the contract to be cash-flow positive as 10% of the contract value is payable after signature, the rest is deliverable in time-based instalments over the next 24 months. This highlights how the switch in business model for the Consumer Electronics division is enabling the group to develop product tailored for deployment in mobile devices while sharing costs with partners who will potentially market the finished products.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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United Kingdom

New York +1 646 653 7026

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US

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NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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