Voltabox — Recharging the batteries

Voltabox — Recharging the batteries

Voltabox is facing a more challenging 2019 than had been expected. Revenue growth remains strong but has been constrained by two factors: a supply chain disruption and a contract deferral due to a specification change. The subsequent under-recovery of incurred overhead costs led to management downgrading FY19 guidance substantially in August, with a return to profitability now expected in FY20.

Andy Chambers

Written by

Andy Chambers

Director, Industrials

Voltabox

Battery technologies

Price

€7.4

Market cap

€117m

Share price graph

Share details

Code

VBX

Shares in issue (m)

15.8m

Net debt as at 30 June 2019

€0.1m

Business description

Voltabox is an electric power systems provider for emobility in industrial and selected consumer applications. It supplies high-performance Li-ion battery packs for intralogistics, buses, mining and pedelecs from locations in Germany and the US. Following its IPO in 2017, paragon owns 60%.

Bull

A leader in high-performance battery packs for specialised industrial use.

Growing number of opportunities in existing and adjacent market sectors.

€1.1bn order backlog should provide visibility and strong growth in the medium/long term.

Bear

Supply chain security needs to be stepped up to avoid repetition of cell supply issues.

More targeted investment may imply lower near-term revenue growth.

Reduced cash flows moved the company into a small net debt position at H119.

Analyst

Andy Chambers

+44 (0)20 3077 5700

Recharging the batteries

Voltabox is facing a more challenging 2019 than had been expected. Revenue growth remains strong but has been constrained by two factors: a supply chain disruption and a contract deferral due to a specification change. The subsequent under-recovery of incurred overhead costs led to management downgrading FY19 guidance substantially in August, with a return to profitability now expected in FY20.

Growing opportunities as the world electrifies

Since winning its first order in 2014, Voltabox has developed rapidly. It has three segments focusing on different market approaches or solutions. Voltapower is the core, supplying high-performance battery systems for trolleybuses, intralogistics (forklifts and automated guided vehicles), backup power, mining equipment and agricultural/construction vehicles. Voltaforce supplies lower-voltage, smaller and lighter battery packs such as starter batteries for motorcycles/ motorsports, as well as standardised ACCURATE battery packs for pedelecs and e-bikes or other low-voltage mass market applications. Voltamotion has developed a range of drivetrain components and power electronics that enable full electrification of vehicles.

FY19 more challenging than anticipated

Voltabox is facing a more challenging FY19 than had been expected by management, but is still growing strongly (H119 sales +77%). A disruption to battery cell supply in H219 from one provider has severely affected output, compounded by a contract deferral in the US for backup power supplies for mobile phone masts. Resources and costs had been deployed to meet the higher level of sales, resulting in continuing losses this year. Sales guidance was reduced to a range of €70–80m (from €105–115m with an EBIT margin of -8% to -9% (+8% to +9% previously).

Growth strategy remains

The H119 disruptions are expected to prove temporary and should be resolved by Q120 to rebuild investor confidence. The €1.1bn backlog and the number of opportunities should allow the long-term value of Voltabox to emerge.

Valuation: Rebuilding credibility

Management is working hard to reduce costs and more effectively invest capital. Assuming the disruptions do prove temporary, FY20 should see a return to sustainable profitability with strong growth potential.

Consensus estimates

Year
end

Revenue
(€m)

PBT
(€m)

EPS
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/17

33.5

(3.5)

(1.39)

0.0

N/A

N/A

12/18

66.9

5.5

0.16

0.0

46.3

N/A

12/19e

80.7

(0.9)

(0.25)

0.025

N/A

0.3

12/20e

116.3

4.7

0.19

0.025

38.9

0.3

Source: Company reports, Refinitiv

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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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been prepared and issued by Edison. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

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No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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