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VSA Capital Market Movers - redT energy#: FY 2017 Results

VSA Capital Market Movers - redT energy#: FY 2017 Results

redT energy#: FY 2017 Results

redT energy (RED LN)#, a developer of vanadium redox flow machines for large-scale energy storage infrastructure applications, has announced its annual results for year-ended 31 December 2017.

  • Revenue: €11.8m, +9.3% YoY (FY 2016: €10.8m); VSA estimate was €12.1m
  • Adjusted EBITDA: loss of €6.7m (FY 2016: loss of €5.2m); VSA estimate was a loss of €6.9m
  • Net Cash as of 31 December 2017: €7.4m (31 March 2017: €17.2m; 31 December 2016: €2.8m). Raised an additional £3.85m in April 2018.
  • Tank Unit Modules Orders Signed: 43

VSA Comment

2017 was a significant year for RED, with a £15m fundraise closed at the start of the year providing funds to more than double staff numbers (24 to 60) and support product development.

As expected, c90% of group revenues were generated by its zero-to-low-margin legacy Camco business, which has now been divested. Although the company secured a total of 43 tank unit module sales during the year, these commercial orders were not recognised as revenue during the year as none had been fully commissioned by year-end. The modest redT energy storage divisional revenues comprised of grant funding (€0.4m) and the release of 2016 licence fees (€0.5m). Revenues from the 43 tank unit sales will instead contribute to its FY 2018 results when systems are made operational at customer sites (RED reported €1.1m in prepayments and accrued income on its year-end balance sheet).

Financially RED has delivered FY 2017 results in-line with our expectations but more important for us is the development of its order pipeline. At the year-end RED had 330 units in the Final Stage of Customer Selection (40 of which were for Gen3 units), for a total order value of €18.3m and an Active Customer Pipeline of €357m, increasing more than 50% during the year.

Since then, RED has announced an additional 155 tank unit orders specifically for its Gen3 product (on top of the 40 Gen3 units in the pipeline at year-end), meaning that 485 units are now in the Final Stage of Customer Selection (Gen2 and Gen3) with combined potential revenues of more than €25m. We look forward to the formal launch of its Gen3 product in H2, which is set to be an extremely important milestone for the company.

For FY 2018, we expect RED to fulfil its existing Gen2 orders and start delivering Gen3 units to customers in the second half of the year. Our current estimates for FY 2018 are for sales of 200 tank unit modules, generating revenues of €11.0m.

We currently have a BUY recommendation on RED with a 10-year DCF-derived target price of 22p. 


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#Indicates VSA house stock.

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