Johan Widmark | 2022-03-30 08:00
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
A patent application for KebNi’s first proprietary inertial sensing application opens the door to an entirely new vertical offering long-term potential worth SEK 100 million. With sales expected to build
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