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Research: Consumer
On 30 November, Evolva announced a private placement whereby Veraison SICAV would purchase 63.75m shares at CHF0.118 per share, or a 7% discount to the lowest daily volume weighted average price during the six trading days preceding the announcement. It raised gross proceeds of CHF7.5m, which will be used to finance ongoing activities. The settlement occurred on 6 December and Veraison now has a c 6% shareholding. We update our estimates to reflect the capital increase. Our underlying operational estimates remain unchanged.
Written by
Evolva |
Updating estimates |
Capital increase |
Food & beverages |
7 December 2021 |
Share price performance
Business description
Next events
Analysts
EvolvaEvolva is a research client of Edison Investment Research Limited |
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On 30 November, Evolva announced a private placement whereby Veraison SICAV would purchase 63.75m shares at CHF0.118 per share, or a 7% discount to the lowest daily volume weighted average price during the six trading days preceding the announcement. It raised gross proceeds of CHF7.5m, which will be used to finance ongoing activities. The settlement occurred on 6 December and Veraison now has a c 6% shareholding. We update our estimates to reflect the capital increase. Our underlying operational estimates remain unchanged.
Year end |
Revenue (CHFm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
11.6 |
(15.6) |
(2.0) |
0.0 |
N/A |
N/A |
12/20 |
7.5 |
(23.4) |
(2.9) |
0.0 |
N/A |
N/A |
12/21e |
14.2 |
(18.6) |
(2.0) |
0.0 |
N/A |
N/A |
12/22e |
27.5 |
(3.8) |
(0.4) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Now expect net cash at end FY21
Evolva has transformed itself from an R&D-driven enterprise to a commercial company with a product-based revenue model. As it nears profit and cash breakeven, it has focused on optimising its manufacturing capabilities and ensuring they are both stable and scalable. Current guidance, which remains unchanged, is for gross profits to become positive by Q421, with a view to reaching cash breakeven by FY23. We have adjusted our forecasts and now expect net cash of CHF2.0m at end FY21, following the private placement, as we assume net proceeds of CHF6.5m.
Adjusting EPS to reflect the dilution
We have updated our estimates to reflect the capital increase. For FY22 and beyond, the number of shares has increased by 6.6%, leading to a corresponding reduction in EPS.
Valuation: Fair value of CHF0.29/share
We continue to value Evolva on a discounted cash flow basis with a 25-year model, assuming cash breakeven in FY23, in line with management guidance. Our fair value was CHF0.30/share before the private placement and therefore moves to CHF0.29. As a reminder, nootkatone contributes c 50% of our fair value for Evolva, with most of this coming from its use in pest control.
Exhibit 1: Financial summary
CHF'000s |
2018 |
2019 |
2020 |
2021e |
2022e |
2023e |
||||||||
Year end 31 December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||||||||
PROFIT & LOSS |
||||||||||||||
Revenue |
|
|
8,933 |
11,596 |
7,541 |
14,163 |
27,468 |
53,750 |
||||||
Cost of Sales |
(6,816) |
(6,305) |
(9,783) |
(16,403) |
(15,001) |
(27,771) |
||||||||
Gross Profit |
2,117 |
5,292 |
(2,242) |
(2,239) |
12,467 |
25,979 |
||||||||
EBITDA |
|
|
(23,350) |
(12,280) |
(16,733) |
(17,332) |
(2,455) |
11,185 |
||||||
Operating Profit (before GW and except.) |
(24,827) |
(14,067) |
(18,397) |
(18,714) |
(3,816) |
9,832 |
||||||||
Intangible Amortisation |
(5,909) |
(6,060) |
(6,508) |
(6,508) |
(6,508) |
(6,508) |
||||||||
Exceptionals |
0 |
0 |
0 |
0 |
0 |
0 |
||||||||
Operating Profit |
(30,736) |
(20,128) |
(24,905) |
(25,222) |
(10,323) |
3,325 |
||||||||
Net Interest |
(622) |
(1,486) |
(4,978) |
79 |
8 |
(48) |
||||||||
Other financial income |
40 |
0 |
0 |
0 |
0 |
0 |
||||||||
Profit Before Tax (norm) |
|
|
(25,409) |
(15,553) |
(23,375) |
(18,636) |
(3,808) |
9,784 |
||||||
Profit Before Tax (FRS 3) |
|
|
(31,318) |
(21,614) |
(29,882) |
(25,143) |
(10,315) |
3,277 |
||||||
Tax |
2,104 |
(25) |
18 |
0 |
0 |
0 |
||||||||
Profit After Tax (norm) |
(23,305) |
(15,578) |
(23,357) |
(18,636) |
(3,808) |
9,784 |
||||||||
Profit After Tax (FRS 3) |
(29,214) |
(21,639) |
(29,864) |
(25,143) |
(10,315) |
3,277 |
||||||||
Average Number of Shares Outstanding (m) |
770.6 |
770.4 |
809.3 |
926.3 |
1,030.7 |
1,030.7 |
||||||||
EPS - normalised (c) |
|
|
(3.0) |
(2.0) |
(2.9) |
(2.0) |
(0.4) |
0.9 |
||||||
EPS - FRS 3 (c) |
|
|
(3.8) |
(2.8) |
(3.7) |
(2.7) |
(1.0) |
0.3 |
||||||
Dividend per share (c) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||||||||
Gross Margin (%) |
23.7 |
45.6 |
-29.7 |
-15.8 |
45.4 |
48.3 |
||||||||
EBITDA Margin (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
||||||||
Operating Margin (before GW and except.) (%) |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
||||||||
BALANCE SHEET |
||||||||||||||
Fixed Assets |
|
|
145,825 |
143,333 |
133,316 |
126,564 |
120,019 |
113,533 |
||||||
Intangible Assets |
138,838 |
133,939 |
123,894 |
117,387 |
110,879 |
104,372 |
||||||||
Tangible Assets |
4,769 |
7,211 |
6,914 |
6,803 |
6,765 |
6,787 |
||||||||
Other fixed assets |
2,218 |
2,184 |
2,508 |
2,375 |
2,375 |
2,375 |
||||||||
Current Assets |
|
|
67,192 |
48,745 |
33,577 |
20,847 |
30,452 |
38,985 |
||||||
Stocks |
4,040 |
5,392 |
9,125 |
15,580 |
23,348 |
29,562 |
||||||||
Debtors |
1,941 |
1,480 |
2,347 |
2,833 |
4,670 |
6,987 |
||||||||
Cash |
60,380 |
39,920 |
19,669 |
0 |
0 |
0 |
||||||||
Other current assets |
830 |
1,954 |
2,435 |
2,435 |
2,435 |
2,435 |
||||||||
Current Liabilities |
|
|
(14,705) |
(12,295) |
(15,139) |
(16,579) |
(16,274) |
(19,052) |
||||||
Creditors |
(743) |
(2,912) |
(2,128) |
(3,569) |
(3,264) |
(6,042) |
||||||||
Short term borrowings |
0 |
0 |
0 |
0 |
0 |
0 |
||||||||
Finance lease obligations |
(782) |
(1,289) |
(1,059) |
(1,059) |
(1,059) |
(1,059) |
||||||||
Other current liabilities |
(13,180) |
(8,095) |
(11,952) |
(11,952) |
(11,952) |
(11,952) |
||||||||
Long Term Liabilities |
|
|
(4,150) |
(7,221) |
(6,662) |
(3,530) |
(16,355) |
(11,494) |
||||||
Long term borrowings |
0 |
0 |
0 |
1,954 |
(11,917) |
(8,102) |
||||||||
Finance lease obligations |
(2,394) |
(4,840) |
(4,179) |
(3,133) |
(2,087) |
(1,042) |
||||||||
Other long term liabilities |
(1,756) |
(2,381) |
(2,484) |
(2,351) |
(2,351) |
(2,351) |
||||||||
Net Assets |
|
|
194,162 |
172,562 |
145,092 |
127,303 |
117,841 |
121,972 |
||||||
CASH FLOW |
||||||||||||||
Operating Cash Flow |
|
|
(23,247) |
(13,577) |
(22,317) |
(21,977) |
(11,511) |
6,284 |
||||||
Net Interest |
(360) |
(583) |
(1,046) |
79 |
8 |
(48) |
||||||||
Capex |
(364) |
(193) |
(1,223) |
(1,272) |
(1,322) |
(1,375) |
||||||||
Acquisitions/disposals |
0 |
0 |
0 |
0 |
0 |
0 |
||||||||
Financing |
(209) |
164 |
0 |
6,500 |
0 |
0 |
||||||||
Dividends |
0 |
0 |
0 |
0 |
0 |
0 |
||||||||
Other cash flow |
(12,595) |
(6,224) |
4,479 |
(1,046) |
(1,046) |
(1,046) |
||||||||
Net Cash Flow |
(36,775) |
(20,413) |
(20,106) |
(17,716) |
(13,871) |
3,816 |
||||||||
Opening net debt/(cash) |
|
|
(97,184) |
(60,381) |
(39,920) |
(19,670) |
(1,954) |
11,917 |
||||||
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
||||||||
Other |
(29) |
(47) |
(144) |
0 |
0 |
(0) |
||||||||
Closing net debt/(cash) |
|
|
(60,381) |
(39,920) |
(19,670) |
(1,954) |
11,917 |
8,102 |
||||||
Source: Edison Investment Research, company data
|
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Research: Industrials
As flagged in its October trading update, during H122 Solid State realised strong year-on-year growth in revenues (19%) and adjusted profit before tax (28%), with both metrics reaching record levels. Management continues to see potential for upside during H2, dependent on careful management of constraints due to supply chain challenges, and is confident that the group will meet the consensus estimate for FY22 adjusted profit before tax. Consensus estimates remain unchanged for now.