Q1 sales came in at a mere € 1.2m with an EBITDA of € -2.6m. This is a significant decrease compared to the particularly strong Q4 last year with roughly € 26m sales and € 1m EBITDA. As pointed out during the earnings call, this should mainly be driven by the seasonal distribution of the company‘s current sales pipeline, which is seen to be similar to last year‘s (H2 dependent). Management hence also confirmed its FY24 guidance of € 60-65 sales and € 0.5-1m EBITDA. Importantly, the current fix cost base should only slightly increase going forward (mainly due to ramping sales efforts, i.e. growing sales headcount and trade shows), providing plenty of room for operating leverage as sales increase.

Recent CMD confirmed the company‘s promising prospects as underpinned by a mid-term guidance. Until the end of FY28e, management expects to grow sales to more than € 150m, implying a sales CAGR of at least 25%, despite an expected annual price decline of 9%. Mind you, its production site should be capable of significantly higher sales (assuming three shifts a day).

As part of the mid-term guidance, LION re-aligned its sales efforts, focusing on three key end markets, namely city buses in Europe (>8t), electric trucks (light and medium duty) in Northern America and stationary storage (uninterrupted power supply and industrial/commercial applications). One of the key enablers, especially for the expected growth within the storage market, should be the upcoming product update (planned for H2), which will feature a LFP battery pack alongside a higher energy density NMC pack (both enabled by the SVOLT partnership).

With its immersion cooled pack, LION would add hybrid/sports cars as fourth end market. In fact, the project is developing as planned and LION expects a first RFQ (request for quotations) until the end of the year. A positive outcome would notably increase the likely hood of it becoming a notably sales driver during the mid-term (currently not part of our revenue model).

Valuation remains attractive. Shares trade on roughly 0.5 EV/Sales FY24e, which is notably below the industry‘s average of around 1x, while the company is expected to show strong growth during the next few years.

We reduce our PT to € 7 (based on SOTP) per share but reiterate out BUY rating.