Topic: LION cut its FY 2023 sales guidance on the back of a bankruptcy of a potential customer

. Importantly, the

positive carried by strong market trends and sufficient spare capacity.

In detail, LION announced that a potential customer of its SE09 battery packs (undisclosed name) with whom the company was in advanced negotiations, had to declare bankruptcy. While LION has not spent large sums on the development of customized packs (eNuW: only € 0.2m but also covered by prepayments), it had to take related planned sales contributions (€ 15m) out of its guidance for FY23, which now stands at € 55-65m (eNuW new: € 60m). As a result, we now expect

. Yet, meeting our new estimate would still

.

O

n a positive note,

, which is why management is confident to be able to partially offset the bankrupt potential customer in FY24. To be more conservative, we trim our estimates for 2023e and beyond.

Why we continue to like the stock

: Following the requalification of its plant at the end of Q1, LION has a 2 GWh factory that can produce up to 45k battery packs annually, which offers a

(assuming that pack prices decrease by 40% and EBIT margins of 7%). Thanks to the recently announced partnership with SVOLT, the company will produce higher energy density (20% more vs currently used cells) NMC and LFP battery packs from H2 2024 onwards. Especially the latter is set to turn into a notable tailwind as it should allow LION to fully break into the thriving energy storage market, which prefers LFP over NMC cells.

In light of the guidance revision being entirely the result of external factors and LION’s mid-term prospects remaining unchanged, the negative newsflow should be more than priced in following the recent share price weakness. Despite lowered estimates, the company is trading on 0.7x EV/sales 2023e (0.5x on FY24e). We hence reiterate

(old: € 11) based on SOTP.