Thanksgiving & BlackFriday typically kicks off the festive gifting season.
Yet arguably this Xmas, some of the best deals for investors reside in the ‘Innovation & secular growth’ arena - which has fallen 70% from its peak.
In the first of our series highlighting several IPR rich ‘fallen angels’ that are substantially undervalued AND on the cusp of breaking out in 2023.
Saietta; Breakthrough Technology at Blackfriday prices
Saietta SED is a developer revolutionary new eDrive/eMotor systems, set to shake up the rapidly expanding electric Truck/Bus, 2-3 wheeler and marine markets.
Saietta has already inked long term agreements with multi $bn, tier 1 suppliers (re Conmet & Padmini). Not only providing marvellous endorsements of the technology, but also who could ultimately sell millions of Saietta’s patented electric driveline systems and motors.
Initial US road trials with Conmet are scheduled for Q1’23. In turn, allowing truck & trailer OEMs (eg Volvo & Ford) to order these best-in-class zero emission eHubs. Whilst in India, #SED’s JV with Padmini is hoping soon to be confirmed as the sole eDrive partner for 3 products, with aggregate life cycle volumes of 500k units.
Elsewhere, rapid progress is being made too on the Propel outboard motor. Targeting significant commercial sales in FY’24 through established distributors across Europe.
View from Vox
With respect to the numbers, Canaccord are forecasting Mar’23 net cash of £11.0m (10p/share) with revenues set to climb 225% from £4.3m LY to £9.7m in FY’23. Over the following year, sales are predicted to jump to £32.0m, positive EBITDA of £8.8m and EPS 4.1p. Just two years out, analysts are projecting further growth of revenue of £101.3m, EBITDA of £62.2m and EPS of 40.4p - putting the stock on a compelling 7.7x FY’24 EV/EBITDA multiple.
Assuming SED achieves its brokers financial targets, then I’d expect the stock to re-rate to a minimum 12x-15x EBITDA multiple by 2025 - equating to 650p-825p per diluted share.
In comparison, Canaccord have a 12M target price of 285p, meaning either way, there are plenty of near-term catalysts (eg new commercial contracts) for investors to feast on this Christmas.