Magnus Brolin & Johan Widmark | 2022-06-23 08:00
This commissioned research report is for informational purposes only and is to be considered marketing communication. This research report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and Emergers is not subject to any prohibition on dealing ahead of the dissemination of investment research. This research does not constitute investment advice and is not a solicitation to buy shares. For more information, please refer to disclaimer.
Strong underlying trend to invest in grid stabilityNow most of Dlaboratory’s customer has reported numbers for investments in 2021. Based on six of the largest customers, weighted increase in CAPEX amounted to 14,7% last year. While a significant part of those investments has been toward environmentally friendly types of energy, which have a different physiological structure than conventional energy types, and Dlab’s service relates to OPEX rather than CAPEX, the number is still a clear indication of the willingness among customers to invest in improved stability of delivery to end customers. Also, Dlaboratory’s service can play a role in solving the capacity shortage and power quality caused by the surge in solar power fed into the electricity grid, making it even more interesting to grid operators.
Granted market approval in IndonesiaFor its international expansion, Dlaboratory has chosen to work with local partners, such as in Jakarta, where the pilot project has been completed and received market approval for the Indonesian electricity market. We now await news on the pace and scale of the future roll-out. Dlaboratory has also received an order from Dubai Electricity and Water Authority (DEWA), which supports our expectation of a larger international roll-out down the road, although the order value is not quantified and does not affect our forecast at this point. The order is a part of a larger restructuring project to upgrade and expand the electricity network in Dubai to meet the environmental goals for 2050. This strengthens our view that Dlaboratory’s service has a role in the transition towards a greener future.
High long-term potentialIn September 2022, Erik Severin will step down as CEO to be replaced by Richard Jacobson, coming from the role as CEO of Comsys. We continue to see the potential for 600 units connected in the domestic markets and 800 units connected outside the domestic markets by the end of 2025, which translates into recurring revenues of SEK 80 million per year. While the acquisition of SLB will continue to provide an artificial boost to reported numbers over the coming two quarters, Dlaboratory is not unaffected by the continued contraction in risk appetite that is currently affecting all tech development companies with earnings far into the future. As a consequence, we now find support for a fair value of 7-9 (9-12) SEK on a 12–24-month horizon. We continue to see a medium to high risk in dLab, where the most significant risks consist of long lead times and high thresholds for adaptation.
GENERAL DISCLAIMER AND COPYRIGHT
This commissioned research report is for informational purposes only and is to be considered marketing communication. This research does not constitute investment advice and is not a solicitation to buy shares. Information provided here or on Emergers’ website emergers.se is not intended to be financial advice. This research shall not be construed as a recommendation or solicitation to invest in the companies described. Emergers cannot be held liable for either direct or indirect damages caused by decisions made on the basis of information in this analysis. Investors are encouraged to seek additional information as well as consult a financial advisor prior to any investment decision.
This material is not intended to be financial advice. This material has been commissioned by the Company in question and prepared and issued by Emergers, in consideration of a fee payable by the Company. Emergers standard fees are SEK 240,000 pa for the production and broad dissemination of a detailed note following by regular update notes. Fees are paid upfront in cash without recourse. Emergers may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.
Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained herein represent those of the research analyst at Emergers at the time of publication. The company has been given the opportunity to influence factual statements before publication, but forecasts, conclusions and valuation reasoning are Emergers’ own. Forward-looking information or statements contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.
Exclusion of Liability: To the fullest extent allowed by law, Emergers shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained in this material.
No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Emergers’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in this material may not be eligible for sale in all jurisdictions or to certain categories of investors. Investors are encouraged to seek additional information as well as consult a financial advisor prior to any investment decision.
Investment in securities mentioned: Emergers has a restrictive policy relating to personal dealing and conflicts of interest. Emergers does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Emergers may have a position in any or related securities mentioned in this report, subject to Emergers’ policies on personal dealing and conflicts of interest.
Copyright: Copyright 2021 Incirrata AB (Emergers)
This document is prepared and provided by Emergers for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the ”FPO”) (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.
This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.
Emergers relies upon the ”publishers’ exclusion” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Emergers does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.