Longspur Research has initiated coverage of Gelion PLC (AIM:GELN, OTC:GELNF, FRA:X0S), the battery materials company, with a central case valuation of 153p per share, representing nearly eight times the current share price of 19.25p.
The broker's bullish case rests on Gelion's proprietary nano-encapsulated sulfur cathode active material, a technology it says can produce batteries that outperform conventional lithium-ion chemistries while costing less to manufacture, even when made in the West.
The cost advantage is the most striking claim in the note.
Longspur calculates that using Gelion's material, a battery cell can be produced in the United States for $52.60 per kilowatt-hour, below the $58.60 per kilowatt-hour cost of a conventional nickel manganese cobalt cell made in China.
That figure, if it holds at commercial scale, would represent a significant shift in the economics of battery manufacturing, removing one of China's most durable competitive advantages in the sector.
The technology also sidesteps several supply chain vulnerabilities that affect rival chemistries, replacing cobalt, nickel and phosphate with sulfur, an element that is abundant globally and produced largely as a byproduct of oil refining.
Gelion's most significant commercial development is a three-year collaboration agreement with Nissan Technical Centre Europe, which is working towards a solid-state electric vehicle by 2028, with manufacturing planned at the company's Sunderland plant.
Longspur says Nissan is looking to Gelion's sulfur cathode to keep its solid-state offering cost-competitive against Chinese rivals.
The company is also working with TDK Corporation, the Japanese electronics giant, which has already produced pouch cells using Gelion's cathode material at its Nagano facility, and with UK defence and security company QinetiQ on drone power applications.
Longspur is forecasting commercial sample sales beginning in the current financial year, with full commercial revenues from 2030 and a move into profit that year.
The broker's low case valuation of 108p reflects a one-year delay to full commercialisation, while its high case of 201p incorporates penetration of the emerging markets for silicon anode, sodium-ion and solid-state batteries.
Key risks cited include the early-stage nature of the technology, dependence on partners to drive adoption, and the possibility that competing approaches to suppressing the polysulfide shuttle effect, a technical problem that had previously hampered sulfur cathode development, could erode Gelion's advantage.
