Equipmake Holdings (EQIP AQSE)
New Contract Announced
Equipmake Holdings (EQIP ASE) EQIP is a UK-based technology company which designs and produces high performance electric motors, inverter, control software, battery management, and pack technology. The Company announced today that it has secured a successive contract (amount undisclosed) with UK-based Golden Tours, to repower a further 10 Volvo B5 London Tour Buses, using its in-house developed Zero-Emission Drivetrain. The drivetrain, an integrated systems solution, includes EQIP motors, control systems, inverters, HVAC, and battery packs. The new contract follows a £2.0m contract with Golden Tours announced in February 2024, to repower a number of its tour buses. The Company’s patented technology is seeing success in bus and off-road vehicle diesel to electric conversion, high end passenger cars, and in aerospace. The new contract announced today adds to rising order books, increasing international opportunities, trials for potentially large volume contracts, partnerships with multinationals. In February 2024, EQIP noted that it had 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 2024 (FY 2024) to £16.3m in FY 2025.
Addressing International Transport Electrification Opportunities
The Company is gaining momentum in the electric bus market and in January 2024, announced that a contract with Ankai London Buses had been doubled to repower a fleet of 20 buses for a total of £3.5m revenue. EQIP’s electrification systems, retrofitted into buses, are on trial with FirstGroup plc which if successful, could see FirstGroup convert 100s of buses to electric. In April 2024, following a successful passenger-carrying trial, First York's fleet of 12 converted, fully electric Optare Versa buses is now in service. In the US, EQIP has been approached by potential partners to address a protected market of some 400,000 US-made Yellow Buses for electrification. The Company is supplying front inverters for one of the major European automotive OEM’s high-performance electric vehicles. EQIP has also 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. Caterpillar Inc. subsidiary, Perkins UK, makes 200,000 engines per annum and is developing a hybrid engine with EQIP for international markets.
Scaling To Move into Profit
The Company’s 2024 financial year (FY 2024) closed on May 31st 2024. For FY 2024, we forecast revenue of £8.5m and an EBITDA loss of £4.7m and for FY 2025, supported by its rising order books, grants, and pipeline, we estimate revenue of £16.3m and an EBITDA loss reducing to £3.0m. 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. In February 2024, EQIP successfully raised £4.1m through a share placing to support future growth.
Valuation
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.
Buy. Target price 12.2 p/sh
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