fbpx

Written by 08:00 Analys, Analysartiklar

KebNi filling its war chest to meet rising demand

With over 10,000 units of the NLAW shoulder-fired disposable anti-tank weapon delivered from Britain and Luxembourg to the war in Ukraine, there is now a great need to both restore stockpiles and strengthen defence capabilities in other Russian neighbours. To meet this expected increase in demand for KebNi’s IMUs, which are part of the NLAW, the company now plans to strengthen its coffers with a combination of a fully secured rights issue of units initially of 43.5 MSEK and a directed issue of 10 MSEK. With a potential in NLAW of over 200 MSEK in the UK alone, and other activities that support KebNi’s strategic plan to 2026, we see support for a fair value of SEK 1.1-1.3 (1.2-1.6) per share on a 18-24 months horizon.

Johan Widmark | 2022-03-30 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.  
 
Injection of SEK 53.5m before costs + SEK 32m in Jan 2023

As we have flagged up previously, KebNi has now announced that it plans to bolster its coffers with a combination of a fully secured rights issue of units with a subscription price of SEK 0.45, corresponding to SEK 0.45 per share, for an initial SEK 43.5m, plus a directed issue of SEK 10m. Of the rights issue, SEK 11.2m is covered by subscription commitments, and the remaining SEK 25.8 + 6.5 million is covered by bottom and top guarantees. The total dilution for non-participants amounts to 55%, or 61% if attached warrants with a subscription price of SEK 0.45-1.00 are fully exercised in January 2023.

IMU with a potential over 200 MSEK in the UK alone

The lion’s share of the proceeds, 30%, is expected to be used to strengthen production capacity in the area of IMUs. KebNi already has a project with SAAB for the development of the next generation NLAW. It could also supply of the type of IMUs used in the current generation NLAW. Given the crucial importance of the NLAW in stopping Russian armour (of which there is ample evidence on social media), demand for the NLAW can also be expected to increase markedly from other countries neighbouring Russia. NLAW is also almost unique with the exception of a comparable competitor, the self-guided US Javelin, which is six times as expensive. A simple calculation exercise shows that if the UK were to replenish its stocks after the 10,000 NLAWs sent to Ukraine and we assume a price per IMU at the lower end of the range for the type used in NLAW, it would mean a business potential of 200 MSEK for KebNi, to the UK alone. As the time horizon and scope of such deals are so far highly hypothetical, we choose to consider it a binary option with high potential rather than something we include in our forecast, but at the same time note the supplementary order from SAAB regarding NLAW in mid-March this year which indicates that bigger things are underway.

Set for a sharp rise in business activity in 2022 and 2023

In addition to IMUs for the NLAW, we note that the recent news flow has included a number of activities that support the company’s strategic plan for 2022-2026, which is to grow SatCom at a pace above the market and to match Inertial Sensing in size by 2025, to show positive operating profit by H2 2023 and positive cash flow in 2024. For example, Satmission is starting to build momentum with a framework agreement in Turkey that has already resulted in three orders totalling SEK 5m and a recent order in Poland, while the company has increased its international representation from one to 17 countries. Together with a number of ongoing discussions in maritime satellites, the new SensAItion IMU family and the possibility of introducing the company’s upcoming position monitoring application in South Korea, this provides support for a sharp boost in business activity in 2022 and 2023. Although the size of the planned issue suggests a more proactive outlook than our previous expectation of an issue of 20 MSEK, we retain our forecast of a sharp increase in sales this year and next year, to 46 MSEK and 83 MSEK respectively, and positive operating profit in H2 2023. With accelerating momentum in activity and development efforts, and adjusting for the cash injection and new shares, we see support for a fair value based on DCF and comparison multiples of SEK 1.1-1.3 (1.2-1.6) per share on a horizon of 18-24 months.

Read Emergers’ report on kebNi here 

DISCLAIMER

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)

United Kingdom
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.

United States
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.

Read Less Read More

For new research on growth stocks, sign up to our newsletter