Redeye research update
Booked 2023 orders to generate 180% sales growth
Redeye updates its estimates following Alelion’s Q3 2022 report, where the main events were the orders from Terberg (September) and Kalmar (October) corresponding to SEK370m.
With a 2023 order backlog of SEK230m and increasing order intake from key customers, Redeye considers Alelion to be well-positioned to deliver ramping sales growth in the coming years.
Lower-than-expected Q3 sales due to orders being pushed into the future
Alelion reported Q3 2022 sales of SEK15.0m, relative to SEK11.8m in Q3 2021, resulting in a 28% y-o-y increase. We estimated sales of SEK22.4m, and we believe the deviation from our estimates is due to H2 2022 orders being slightly pushed into the future due to component shortages among Alelion’s key customers. Alelion has also negotiated price increases with these customers, which should support margins in 2023.
Order intake grew from SEK12m in Q3 2021 to SEK130m in Q3 2022 following Terberg’s massive SEK130m order. Due to lower-than-expected OPEX, EBITDA amounted to SEK12.1m relative to our estimate of SEK-12.3m – a minor deviation of -2%.
Impressive sales growth is expected
Redeye expects Alelion to report sales of SEK82m in 2022, growing to SEK230m in 2023 and SEK334m in 2024. Alelion is expected to become EBITDA positive in H2 2023 and to report positive FY EBITDA in 2024.
2023 sales estimates are considered robust, as the order backlog corresponds to sales estimates. The greatest upside estimate risk should be if additional orders are received, and downside-risk if orders are pushed into the future due to component shortage. On the back of recent orders, Redeye analysts increase sales estimates for 2023 and 2024 by 11-15%, resulting in a base case of SEK 1.1 (1.0).
Valuation is largely dependent on share issue terms
The greatest risk to our valuation is the awaiting share issue that needs to be made to secure financing for 2023. We have highlighted this on several occasions, and our estimates currently reflect a SEK55m share issue priced at SEK0.6 per share – corresponding to a dilution of approx. 20%. Any changes to these assumptions would have an impact on our fair value range.
