Leclanché — Construction commenced on St. Kitts project

Leclanché (SW: LECN)

Last close As at 21/02/2024

0.96

0.00 (0.00%)

Market capitalisation

288m

More on this equity

Research: Industrials

Leclanché — Construction commenced on St. Kitts project

Leclanché has announced that construction has begun on the St. Kitts project. This project consists of a fully integrated 35.7MW solar farm and 45.7MWh battery storage facility deploying Leclanché’s proprietary energy management system software. The project will be the largest in the Caribbean and Leclanché’s largest project so far. It will also be the first project where Leclanché adopts a build, own and operate (BOO) model. Our estimates remain under review until there is greater clarity on the business reorganisation outlined in our October note.

Analyst avatar placeholder

Written by

Industrials

Leclanché

Construction commenced on St. Kitts project

Project update

Alternative energy

14 December 2020

Price

CHF0.97

Market cap

CHF252m

Net debt (CHFm) at end June 20 (including CHF54.0m convertible debt and CHF4.1m IFRS 16 lease liabilities)

64.4

Shares in issue (after conversion of debt to equity)

260.1m

Free float

20.6%

Code

LECN

Primary exchange

SIX

Secondary exchange

N/A

Share price performance

Business description

Leclanché is a fully vertically integrated energy storage solution provider. It delivers a wide range of energy storage solutions for homes, small offices, large industries and electricity grids, as well as hybridisation for mass transport systems such as bus fleets and ferries.

Analyst

Anne Margaret Crow

+44 (0)20 3077 5700

Leclanché is a research client of Edison Investment Research Limited

Leclanché has announced that construction has begun on the St. Kitts project. This project consists of a fully integrated 35.7MW solar farm and 45.7MWh battery storage facility deploying Leclanché’s proprietary energy management system software. The project will be the largest in the Caribbean and Leclanché’s largest project so far. It will also be the first project where Leclanché adopts a build, own and operate (BOO) model. Our estimates remain under review until there is greater clarity on the business reorganisation outlined in our October note.

Year end

Revenue (CHFm)

EBITDA

(CHFm)

PBT*
(CHFm)

EPS
(CHF)

DPS
(CHF)

P/E
(x)

12/17

18.0

(31.1)

(37.8)

(0.68)

0.0

N/A

12/18

48.7

(36.9)

(47.8)

(0.62)

0.0

N/A

12/19

16.3

(57.5)

(71.5)

(0.53)

0.0

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Renewables account for only 5–6% of the electricity produced on the island of St. Kitts, making it heavily reliant on imported fossil fuel, especially diesel, for power generation. The government is keen to reduce this dependence as global oil price fluctuations directly affect the cost of power, thus affecting household disposable incomes and GDP. It has approved the allocation of land for the project site and, through the state-owned utility SKELEC, signed a 20-year power purchase agreement. The project should reduce diesel use by 30–35%, saving money and cutting carbon emissions by more than 740,000 tonnes over 20 years, which is equivalent to the emissions from 8,000 passenger vehicles. Once completed, the new project will provide 30–35% of the island’s existing power-generation requirements.

Leclanché is forming a separate holding company that will own the St Kitts solar farm and energy storage facility and other BOO developments that have already been identified. Leclanché will own the majority stake in the holding company and is securing equity finance and a construction loan from external investors. Management expects this holding company will generate c CHF5m in annual EBITDA from the St Kitts project for a 20-year period from 2022.

The shift to a BOO model had an adverse impact on FY19 performance, which showed a year-on-year revenue drop of CHF32.4m. Had Leclanché gone ahead with construction on the St. Kitts project on a build, own, operate, transfer (BOOT) basis in 2019, as it had originally planned, management estimates this would have enabled the group to recognise another CHF50m of revenues, giving year-on-year revenue growth during FY19. However, the move makes the group less exposed to yearly variations in revenue associated with the completion of individual projects.

General disclaimer and copyright

This report has been commissioned by Leclanché and prepared and issued by Edison, in consideration of a fee payable by Leclanché. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

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 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

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

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

1185 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

More on Leclanché

View All

Latest from the Industrials sector

View All Industrials content

Nightcap — A heady cocktail

With the launch of Nightcap, entrepreneurial management with significant experience in developing successful bar groups is seizing a clear-cut opportunity to build a major drinks-led UK hospitality business. The increased availability of target sites at attractive rents, sharply reduced competition and shifting consumer preferences highlight extensive changes beneficial to Nightcap, which have only been accelerated and enhanced by COVID-19. London Cocktail Club (LCC) looks a strong first move for Nightcap as it is both popular and well-regarded in its own right – and highly scalable. This acquisition is likely to be just the start.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free