There is a global political commitment to a net zero-carbon economy. Environmental, Social and Governance (ESG) investing has gone mainstream. Carbon prices are rising and new environmental taxes are being levied.
In this context it is no surprise that thousands of corporates are now on a mission to decarbonise.
Enter VivoPower, the first listed B-Corp dedicated to making it happen. Here are seven things every investor should know about one of Edison’s newest clients.
1. VivoPower is defining a new sector – decarbonisation acceleration
Where do corporates turn when they need to take more carbon out of their business in a hurry? Until recently, they needed a complex network of suppliers and their own know-how. Now they can turn to VivoPower. This Film by Edison sums up VivoPower’s vision and our initiation note explains how it is delivering the reality.
2. We value VivoPower at $19 per share
At Nasdaq close on 5 April 2021, VivoPower was trading at $10.19. Yet using discounted cashflow analysis, our analyst David Larkam values the business at $19 a share. Some investors may take an even more positive view – future deal flow could generate value not yet visible on the balance sheet.
3. Decarbonisation is very much in vogue
The momentum is such that Schroders believes decarbonisation may be ‘the megatrend of the decade’ and has aligned its potential with that of FAANG stocks. VivoPower specialises in transforming hard-to-decarbonise industries, especially the mining sector, and is gaining a reputation in sports.
4. At the heart of VivoPower is an electric vehicle play with a world-first $250m deal
VivoPower now owns all of Tembo, a rugged electric off-road vehicle company. In what is believed to be the most valuable deal for electric vehicles in the Australasian region to date, GB Auto will buy at least 2,000 units from Tembo in the first four years of US$250m deal.
5. On Tembo sales alone, peer analysis is favourable
Our sums show the average peer EV/sales multiple is 2.9x revenue, which would suggest a Tembo-only valuation of c $435m. Other EV companies are, of course, valued far more highly than this average.
6. Tembo has very little competition
We can find no deal comparable to Tembo’s with GB Auto. This is a positive because the mining industry is hungry to change – not only in decarbonisation, but also in removing diesel fumes from shafts to reduce costs and improve health and safety.
7. VivoPower has many other services to help corporates decarbonise
VivoPower has struck a high-profile deal with UK Premier League football club Tottenham Hotspur, showcasing many of VivoPower’s abilities to accelerate corporate decarbonisation. It envisages on-site solar power generation, a distribution grid and electric vehicle charging stations, plus re-use of batteries that are no longer able to power electric vehicles. Take a look at it in more depth with this video.
To understand all of VivoPower’s operations and financials in more detail, read our initiation report.
VivoPower is a client of Edison Group.