Share Placing Underpins Growth
Equipmake (EQIP ASE) designs and produces high performance electric motors, inverters, control software, battery management, and pack technology for transport. The Company has today raised £4.0m gross through the placing of 67.2m shares at a price of 6p. The funding will be used for R&D, developing U.S. opportunities, and providing working capital. A Retail Offer to raise up to £0.3m at 6p per share is in process. EQIP’s patented technology is seeing success in bus and off-road vehicle diesel to electric conversion, high end passenger cars, and in aerospace. Given rising order books, increasing international opportunities, trials for potentially large volume contracts, partnerships with multinationals, all now underpinned by new funding, EQIP has a fantastic opportunity for growth.
Addressing International Markets in Electrification
EQIP’s electrification systems, retrofitted into buses, are on trial with FirstGroup plc which, if successful, this could see FirstGroup convert 100s of buses to electric. In the U.S., EQIP has been approached by potential partners to address a protected market of some 400,000 U.S. made Yellow Buses for electrification. Caterpillar Inc. subsidiary, Perkins UK, makes 200,000 engines per annum and is developing a hybrid engine with EQIP for international markets. The Company is supplying front inverters for one of the major European automotive OEM’s high-performance electric vehicles. EQIP recently secured orders for electrification systems for trials on airport ground support vehicles: a market estimated to be worth US$8.3bn in 2024, rising to US$11.6bn in 2029.
Achieving Scale and Driving Profits
With order books of £13.1m, grants of up to £4.6m and an opportunity pipeline of £24.0m, we see revenue growing strongly from £8.5m in the year ending May 2023 (FY 2024) to £16.3m in FY 2025. In FY 2026, as volumes rise into the longer-design in timescale transport OEM markets such as the joint development with Caterpillar/Perkins, we see the business achieving scale with revenues of £26.6m producing an EBITDA profit of £2.0m.
Recommendation and Target Price
EQIP’s patented electrification technologies are highly attractive to those entering the vehicle electrification markets. The Company is growing opportunities in Europe and the U.S., as well as orders, revenues, and expanding margins. On a blended basis, we value EQIP at an EV of £119.5m and market capitalisation of £124.0m (we now estimate closing cash of £4.5m at May 2024 end).
Buy. 12-month Target Price of 12.2 p/sh.
VSA Capital Limited is Authorised and Regulated by the Financial Conduct Authority and is a member of the London Stock Exchange and the Aquis Stock Exchange.
The Company is registered in England with company number 2405923 at Park House, 16-18 Finsbury Circus, London EC2M 7EB.