Andreas Eriksson | 2023-10-04 08:00
Reducing energy input by 50%On the back of last year’s soaring energy prices, customers have taken measures to prepare for the coming winter, but the challenges of building a sustainable energy system persists. Fluctuating wind and solar energy production pose a base load challenge amid increasing energy demands. Grid issues also persist. Cost-effective solutions that reduce the energy footprint are imperative. With a comprehensive range of services provided through its subsidiaries, Free2Move (energy usage analytics and optimization via the 2Connect platform), Solortus (solutions such as solar power, energy storage, charging stations, and control technology), Sydvent (ventilation services to commercial property owners, industries, construction firms, and individuals), enables Free2Move Group to achieve a 50% reduction in energy input, consequently reducing overall demand and lowering costs.
New financial backdrop forces property owners to actAs financial markets adapt to a new reality marked by notably higher interest rates, property owners find themselves in a transformed landscape. In a time when financing was abundant, large-scale property ownership often generated substantial returns almost without effort. However, these same companies now face the necessity to innovate and optimize to ensure return on their investments. While the financial benefits associated with new technology are obvious, there are also considerable environmental advantages. Significant reductions in energy consumption lead to substantial environmental benefits, which is a matter of increasing significance as both consumers and regulators raise their expectations in response to the accelerating green transition.
Half year sales 3x the size of current Market CapFree2Move achieved a sales CAGR of 20% from Q2’22 to Q2’23, resulting in an year-over-year total growth of 101%. Even though a large part can be attributed to the acquisition of Solortus, we believe that cross synergies between the subsidiaries has provided, and will continue to provide organic growth going forward. With a capital injection of SEK 15.2m through a rights issue we believe Free2Move will have the financial muscles to reach neutral CF in 2024E. Our forecast of full year sales of SEK 70m for 2023E and SEK 90m for 2024E now supports positive EBITDA in 2024, which compares to our previous forecast of positive EBITDA already this year. Achieving profitability empowers Free2Move to procure goods in larger quantities, a move that will have a favorable impact on gross margins. Attaining this milestone is pivotal for realizing the company’s long-term potential. Using a WACC of 23% and target multiples of 0.9x sales’24 and 10x EBITDA’24, our valuation approach supports a fair value range post issue of SEK 0.24 – 0.29 per share, in 12-24 months. A successful execution of the company’s acqusition strategy would add even more value on top of this, and while we are optimistic towards it, we do not account for any future acquistions in this research report.
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 charges a standard fee 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 2023 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.