Topic: LION E-Mobility received a € 12m order for battery packs from electric bus manufacturer KARSAN. Its ambitious growth prospects and recent order momentum should leave room for additional battery pack orders in the short-term.

In detail, the € 12m battery pack order comprises € 6m in firm orders to be delivered in FY24 as well as a € 6m floating component to accommodate the evolving needs of KARSAN and the rapidly expanding market for electric buses. LION expects the floating component of the order to also be delivered in FY24.

KARSAN is a Turkish manufacturer of electric buses used for public transportation that is mainly active in Europe (e.g. ~40% market share in Luxemburg and Romania and 19% in France) but is also expanding its business in North America and that is in the midst of entering Japan. According to its FY24 targets, KARSAN plans to more than double its vehicle output to 1.2-1.3k vehicles compared to FY23. As the company does not have its own battery pack production, it heavily relies on partners such as LION. We hence expect further follow-up orders during the foreseeable future.

Newsflow to remain positive. LION is expected to release preliminary FY23 figures on March 21st. As already highlighted during the Q3 earnings call in December, the company is seen to report € 25m sales in Q4 alone - a significant sequential step-up (vs. 9M of € 29m). Throughout FY24, LION should, report further larger order wins in its Mobility and Storage segments (eNuW). The latter is seen to experience significant tailwinds from the planned launch of a LFP-based battery pack during the second half of the year.

After all, valuation remains very attractive. While 2023 should be seen as transition year, FY24e looks set to be marked by (1) strong sales growth (eNuW: 44% yoy) thanks to a running production and an increased sales force, (2) LION turning at least EBITDA breakeven thanks to operating leverage, (3) the launch of LFP battery packs and (4) further progress on the LIGHT battery. Still, shares trade at a mere 0.5x EV/sales 2024e.

We hence reiterate BUY with an unchanged € 10.50 PT based on DCF.