Mynaric — Laser communication made scalable

Mynaric (SCALE: M0Y)

Last close As at 04/10/2024

28.80

−2.25 (−7.25%)

Market capitalisation

EUR165m

More on this equity

Research: TMT

Mynaric — Laser communication made scalable

Mynaric has developed optical inter-satellite link (OISL) terminals for transmitting data via laser between moving space or airborne platforms at rates similar to conventional optical fibre, but with the light transmitted through free space rather than along a cable. Recent newsflow demonstrates that not only are government and commercial entities planning satellite constellations deploying optical communications links, but also that Mynaric is being selected as a supplier of laser communications terminals for these constellations.

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TMT

Mynaric

Laser communication made scalable

Technology

Deutsches Eigenkapitalforum 2021

21 October 2021

Price

€59.2

Market cap

€243m

Share price graph

Share details

Code

M0Y

Shares in issue

4.1m

Net cash at end December 2020 (excluding €8.0m lease liabilities)

€43.2m

Business description

Mynaric designs and manufactures laser communication terminals and ground stations for airborne and spaceborne networks and applications. Its objective is to become the world’s leading provider of network equipment for the aerospace communication industry using its serially produced and low-cost laser communication products.

Bull

Wireless laser technology gives faster data rates than conventional microwave transmission.

Wireless laser technology potentially brings internet connectivity to remote or hostile regions without installing fibre optic cable

Tech is cost effective for mega-constellations

Bear

Technology not proven in complete satellite or airborne communications networks yet.

Rate of commercial roll-out dependent on network operators securing funding.

Limited number of potential network operators to which company can sell equipment.

Analyst

Anne Margaret Crow

+44 (0)20 3077 5700

Mynaric has developed optical inter-satellite link (OISL) terminals for transmitting data via laser between moving space or airborne platforms at rates similar to conventional optical fibre, but with the light transmitted through free space rather than along a cable. Recent newsflow demonstrates that not only are government and commercial entities planning satellite constellations deploying optical communications links, but also that Mynaric is being selected as a supplier of laser communications terminals for these constellations.

Getting ready for volume production

In preparation for volume shipments, in June 2021 Mynaric opened a new production hall at its facility in Germany. This facility recently reached high double-digit unit annual production rates and is on track for triple-digit unit production for 2022 to meet the market demand from both commercial and government customers, with an ultimate annual production target of 2,000 terminals.

Supporting needs of LEO constellations and more

These actions put Mynaric in a good position to take market share as the Space Development Agency (SDA) and others move from the pathfinder phase to full-scale deployment of hundreds of low earth orbit (LEO) satellites. We have previously inferred that Mynaric has been selected as one of the vendors of OISL terminals for the first phase of the SDA’s proposed satellite communications network. Mynaric has also been selected by Telesat to supply multiple units of its OISL terminals to the US Defense Advanced Research Projects Agency’s Blackjack programme, by SpaceLink for its proposed satellite network providing data relay services and by Cloud Constellation for its proposed network providing secure cloud storage on satellites. Mynaric has also started a joint demonstration campaign with high-altitude platform specialist H3 HATS. The two companies have successfully demonstrated stable bidirectional 10 Gbps laser links between an aircraft and a terminal on the ground using pre-series production terminals.

Valuation: Analysis of potential revenue

Mynaric does not expect to start delivering its first commercial units until H221, so we present a scenario analysis rather than a peer group comparison of multiples. This analysis shows a constellation of 100 LEO satellites could require €75m of Mynaric’s laser communications terminals and a cluster of 250 airborne communications platforms could require equipment with an estimated €113m in revenues attributable to Mynaric.

Consensus estimates

Year
end

Revenue
(€m)

EBITDA
(€m)

EBIT
(€m)

EPS

(€m)

DPS
(€m)

P/E
(x)

12/19

0.4

(6.5)

(7.7)

(2.7)

0.0

N/A

12/20

0.7

(19.7)

(21.7)

(6.8)

0.0

N/A

12/21e

4.0

(20.0)

(24.8)

(6.0)

0.0

N/A

12/22e

19.3

(2.7)

(3.7)

(1.8)

0.0

N/A

Source: Company data, 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

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

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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

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

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.

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 2021 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

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

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