VivoPower International (VVPR): Initiation - EV Platform for Growth

Rhea-AI Summary

VivoPower is advancing its sustainability-focused business model through the acquisition of Tembo, enhancing its electric vehicle (EV) segment. This strategic move aims to leverage the growing demand for decarbonization. Analysts have set a DCF valuation of $19 per share, dependent on the performance of Tembo, particularly in its projected sales of 5,000 vehicles by 2025. Production ramp-up poses potential risks related to manufacturing and supply chain logistics.

Positive

• Acquisition of Tembo enhances VivoPower's portfolio in electric vehicles, indicating growth potential.
• DCF valuation set at $19 per share suggests significant upside should target sales be met.

Negative

• Sales projections for Tembo are sensitive; a variance of 1,000 vehicles impacts valuation by approximately $5.
• Potential risks in production ramp-up related to manufacturing, supply chain, and logistics.

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.

Click here to view the full report or here to sign up to receive research as it is published.

All reports published by Edison are available to download free of charge from its website www.edisongroup.com.

About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached - across institutions, family offices, wealth managers and retail investors - Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings.

Having been the first in-market 17 years ago, Edison now has more than 100 analysts covering every economic sector. Headquartered in London, Edison also has offices in New York, Frankfurt, Amsterdam and Tel Aviv and a presence in Athens, Johannesburg and Sydney.

Edison is authorised and regulated by the Financial Conduct Authority.

Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities.

For more information, please contact Edison:

David Larkam +44 (0)20 3077 5700, industrials@edisongroup.com

Learn more at www.edisongroup.com and connect with Edison on:
LinkedIn https://www.linkedin.com/company/edison-group-/
Twitter www.twitter.com/Edison_Inv_Res
YouTube www.youtube.com/edisonitv

SOURCE: Edison Investment Research Limited

View source version on accesswire.com:
https://www.accesswire.com/637926/VivoPower-International-VVPR-Initiation--EV-Platform-for-Growth

FAQ

What is VivoPower's DCF valuation as of March 2021?

VivoPower's DCF valuation is set at $19 per share.

How many vehicles does VivoPower project to sell by 2025?

VivoPower projects to sell 5,000 vehicles by 2025.

What risks are associated with VivoPower's acquisition of Tembo?

Risks include production ramp-up challenges affecting manufacturing and supply chain logistics.

How will changes in Tembo's sales impact VivoPower's stock valuation?

A change of 1,000 vehicles in sales can affect VivoPower's valuation by about $5 per share.