Invinity Energy Systems (IES)#: Trading Update
Trading Update
Invinity Energy Systems (LON:IES), the manufacturer of Vanadium Flow Batteries (VFBs) for the large-scale energy storage requirements of businesses, industry and electricity networks, this week issued a Trading Update. To date, 10 MWh of IES VFBs have been installed at more than 40 sites, in 15 different countries. In FY20, the Company won 18.6MWh of new orders to contribute to our FY20 forecast of 23.4MWh of demand.
Accelerating Commercial Momentum
The IES opportunity pipeline of 143.7MWh is up 18% since November 2020. The market is significant; Bloomberg New Energy Finance predicts the sector will receive approximately US$620 billion in new investment by 2040 with the market projected to grow by nearly 900% between 2017 and 2022. Against this background, according to IES prior announcements, VFBs are expected to capture around 18% of a total addressable stationary energy storage market by 2027.
New Investment and Capacity Expansion
On December 22nd 2020, to support growth, IES raised £22.5m gross through a share issue. In the Trading Update, IES reported a 100% increase in stack manufacturing capacity (vs. December 2020), a second stack manufacturing expansion planned for April 2021 providing a 200% capacity increase (vs. December 2020) and an agreement with its manufacturing partner in China giving an option to increase capacity by up to +80% from Q2 2021.
Target Price and Recommendation
We have made modest changes to our forecasts, detailed overleaf, to allow for COVID-19 related supply chain disruption impacting production and logistics near term. Our view remains unchanged; IES faces a compelling opportunity for long duration, multi cycle, battery storage supporting the global transition to renewable energy generation.
We reiterate our Buy recommendation and target price of 269p/sh.
Phil Smith, Transitional Energy Analyst | T: +44 (0)20 3617 5187 | E: psmith@vsacapital.com
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