Edison Investment Research Limited: VivoPower International (VVPR): Initiation - EV Platform for Growth

Rhea-AI Summary

VivoPower is advancing its sustainable business model, focusing on decarbonisation through electric vehicles and renewable energy. The acquisition of Tembo marks a significant growth opportunity in a niche market. Their Discounted Cash Flow (DCF) analysis values shares at $19, with growth projections of 5,000 vehicle sales by 2025. Each additional 1,000 vehicles could impact the valuation by approximately $5 per share. Risks include production ramp-up and supply chain challenges.

Positive

• Acquisition of Tembo provides significant growth opportunities in the electric vehicle market.
• DCF valuation of $19 per share indicates strong potential upside.

Negative

• Valuation highly sensitive to vehicle sales; a 1,000 vehicle deviation could alter share value by $5.
• Production ramp-up risks, including manufacturing and supply chain issues.

LONDON, UK / ACCESSWIRE / March 30, 2021 / VivoPower is building a sustainability orientated business focused on decarbonisation of the economy, through electric transportation and renewable energy generation services. The move into electric vehicles through the acquisition of Tembo is a step-change. It brings significant growth potential in a niche market while VivoPower's scale and presence has already delivered a transformational deal to this new activity. This will be augmented by the existing Critical Power division and development of an additional suite of energy management services.

Our DCF valuation stands at $19 a share (13% WACC). The key delta is inevitably the fortunes of Tembo. The primary variable is the growth rate. Our DCF assumes sales of 5,000 vehicles in 2025 but a change of 1,000 vehicles has an impact on our valuation of c $5 a share, highlighting the high level of sensitivity at this early stage in Tembo's development. Further risks/sensitivities come from the ramp-up of production including manufacturing, supply chain and logistics.

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SOURCE: Edison Investment Research Limited

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FAQ

What is VivoPower's current share valuation?

VivoPower's current Discounted Cash Flow valuation stands at $19 per share.

What are the growth projections for Tembo?

VivoPower anticipates sales of 5,000 vehicles by 2025 for Tembo.

What risks does VivoPower face with the Tembo acquisition?

Risks include challenges related to production ramp-up and supply chain logistics.

How sensitive is VivoPower's valuation to changes in vehicle sales?

Each change of 1,000 vehicles sold could impact VivoPower's valuation by approximately $5 per share.

What is the significance of the Tembo acquisition for VivoPower?

The acquisition positions VivoPower for growth in the electric vehicle sector.