Invinity Energy Systems#: Trading Update
Invinity Energy Systems (LON:IES), today issued a Trading Update for FY 2020 highlighting the strong performance since formation just a year ago but also the challenges faced building a business in a pandemic. IES was formed by the merger of Avalon Battery and AIM-listed redT energy in March 2020 and a GBP7.4m placing. This all happening as the global Covid-19 pandemic took hold. 2020F revenues are today reported as just GBP0.4m. However, during the period, the business was being transformed by the new management team and IES won 18.6MWh of new orders, with expected revenue contribution from 2020 closed orders of GBP11.7m, underpinning our FY 2021 revenue forecast of GBP13.0m revenue.
Building a Business in Midst of Pandemic
IES, with operations in the UK, Canada, the US and with outsourced manufacturing in China is being built to internationally scale. Teams have been formed to specify, manufacture, deliver and commission projects. Manufacturing capacity is undergoing major expansion. Product Development focus has accelerated design improvements to reduce system costs and increase performance. R&D advances in proprietary Battery Management System (BMS) algorithms, core materials technology and product have seen 18 international patents granted since August 2020. New orders have been won and commercial opportunities opened up. GBP22.5m was successfully raised from investors in December 2020 and Siemens Gamesa signed a strategic development agreement in May 2021. All this was achieved under the extraordinary conditions of the pandemic, with restricted face to face contact across operations and with customers.
Target Price and Recommendation
We have made changes to our forecasts, detailed overleaf, reflecting the latest published information, guidance from the Company but also taking into account inflationary pressures and supply chain disruption impacting production and logistics near term.Our view remains unchanged; IES faces a compelling opportunity for long duration, multi cycle, battery storage supporting the global transition to renewable energy generation.
We reiterate our Buy recommendation and target price of 269p/sh.
Phil Smith, Research Director, Head of Transitional Energy | T: +44 (0)20 3617 5187 | E: [email protected]
VSA Capital Limited, New Liverpool House, 15-17 Eldon Street, London EC2M 7LD | www.vsacapital.com
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