Sales in Q3 came in at € 6.4m

, 40% lower than last year’s figure but in line with expectations (9M sales € 12.4m, -58% yoy) due to the ongoing pressure from Chinese storage solution providers and continuously burdened battery demand within the mobility segment. The latter is mainly the result of weakened demand for end products (e.g. electric mini buses) but also by falling battery prices and the resulting “wait and see” mentality of customers. Yet, sales increased sequentially by 33% vs Q2 and 5x vs Q1. 

EBITDA also further improved compared to previous quarters

, coming in at € -1.2m (Q2: € -2.2m, Q1: € -2.6m) as a result of ongoing tight cost control (e.g. other operating expenses -33% vs H1). 9M EBITDA came in at € -6m.

Confirmed FY24e guidance implies notable Q4 pick up. 

Management still expects FY sales of up to € 42m and slightly negative EBITDA (eNuW: € 33m sales and € -4.8m EBITDA). Our estimates imply a strong Q4 with € 20.8m sale and € 1.2m EBITDA.

TÜV SÜD Battery Testing boosts liquidity.

 With the announced divestment, LION is seen to have received at least the recorded book value (FY23 annual report) of € 5.6m. In our view, the company should use to cash inflow to repay some of its debt, improving the balance sheet and reducing the interest burden. Mind you, during the first 9M of 2024 the company recorded € 1.9m of interest expenses.

First glance at LIGHT Battery potential. 

Management shared promising testing results of the LIGHT battery (compared to the German premium OEM’s current series solution). It showed significantly increased output power and cooling performance as well as high continuous power output without derating or power fade. Importantly, the LIGHT battery’s target market is rather a niche (PHEV and BEV cars with >100k€ selling prices). Yet, until 2030 it should reach up to € 1.4bn. While we would not expect series-related revenues until H2 2026e, LION should already be able to record revenues from small test volumes. Assuming testing of the planned series performs as planned, LION should receive a formal order.

Operations to improve in H2 2025.

 As highlighted during the earnings call, management expects continuously burdened demand from mobility customers until H2 2025. In fact, the company mentioned first promising discussion with e-bus/e-truck makers, underpinning our growth expectations.

BUY with an unchanged € 3.60 PT

 based on DCF.