fbpx

Written by 12:00 Analys

Mushrooming opportunities with NLAW redraws the case in KebNi

KebNi’s report for Q1 2022 showed revenues largely in line with our estimate (6.2 vs 6.9 MSEK), driven by the postponed deliveries to IAI, with final shipments in April. We continue to expect an acceleration in international activity in Satmission to drive a steep increase in sales in 2022, while we expect the mushrooming opportunities associated with existing and next generation NLAW to drive significant growth from H2 2023 and beyond, implying that we can expect first orders for series production in the coming six months. Until we get a clearer picture of the ramp-up, after the first volume order and KebNi’s revised financial targets, we expect the main impact from NLAW volume production to occur beyond our forecast horizon in 2024, meaning that we keep our topline forecast in 2022-2024 unchanged but now see support for a post-money fair value of SEK 1.2-1.8 (1.1-1.3) per share in 12-24 months.

Johan Widmark | 2022-05-03 12:00

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.  
 
High volume potential drawing closer

Seeing the crucial role NLAW has played in stopping Russian tanks in Ukraine, there is not only need to restore stockpiles of the +10,000 NLAWs already sent to Ukraine. As evidenced by Swedish Armed Forces’ Materiel Administration’s agreements with the Baltic states, there is also an increasing interest from countries neighbouring Russia to buy the weapon system, in which KebNi’s IMU is planned to be included in the next generation, and potentially retrofitted into the current generation. In April, KebNi announced a strategic order to complete the development at an accelerated pace and initiate preparation for series volume production, indicating that the delivery phase could be initiated after series volume production preparations have been finalized in H2 2023. With global component shortage and pressured supply chains, orders would likely have to be placed 12 months in advance of expected deliveries, which means that we could see the first orders for volumes production in the coming six months.

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.

New targets more aligned with long term goals in H2 2022

KebNi is now in the process of bolstering 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. Considering that the subscription price of SEK 0.45 per unit/share equals a steep discount to current share price we expect a full subscription which will give the strength to capitalize on the opportunities at hand.

Furthermore, KebNi’s board has announced the intention to prioritize activities related to NLAW ahead of its existing financial targets and will therefore set new financial targets more aligned with the company’s long-term goals. These will be communicated in H2 2022 but implies that we’re likely to see heavier investments in production in the near term in order to capture higher volumes down the road. Until we get a better picture of the magnitude of the series volume orders, it is hard to estimate the pace of a future volume ramp-up. But we expect the main impact to occur beyond our forecast horizon in 2024. All in all, we maintain our top line estimate for 2022-2024 but calculate for a build-up in capacity in the near term, and higher potential in 2025 and beyond, which support a post-money fair value of SEK 1.2-1.8 (1.1-1.3) per share in 12-24 months.

Read Emergers’ report on kebNi here 

DISCLAIMER

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)

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.

Be first to read new research on growth stocks