Member Info for GQuayle

From Berenberg's note this morning:

Capital raise: The transaction successfully raised gross proceeds of c£103m

(net £100m) through the issuance of c18m new shares at a price of 570p,

representing a c6.5% discount to the prior day’s close (8 June). The raise

equated to approximately c9.2% of the company’s market cap.

● Strategic rationale: With global momentum for SOFC technology rapidly

accelerating, the boost to Ceres’ balance sheet should help to drive the next

leg of growth and cement the company’s position as a resilient, long-term

innovation partner. Financial strength and a strong net-cash position are

key factors when negotiating new licences and supporting existing partners

that are making significant investments in manufacturing infrastructure.

The proceeds will help to fund selective investments to protect key

intellectual property and develop the supply chain, including facilities to

supply critical components. This should facilitate partner expansion, and

accelerate Ceres’ scale-up of both solid oxide fuel cell (SOFC) and future

reversible solid oxide electrolyser cell (SOEC) applications.

● Time-to-power issue provides an opportunity: The significant growth in

energy-intensive industries such as data centres has demonstrated that time

to power has become the key constraint in the space. With traditional grid

connections facing delays of at least five years and gas turbines sold out into

the next decade, Ceres’ SOFC technology offers an alternative on-site power

solution. It provides a highly-efficient and reliable behind-the-meter

solution that allows energy-intensive industries to bypass grid bottlenecks.

With global SOFC demand projected to reach 22GW by 2030, we think that

Ceres and its partners are ideally positioned to take full advantage.

● Valuation/numbers: We incorporate the raise and new shares into our

numbers and make tweaks to working capital and capex investments. We

see a small dilution in our price target from the raise, with this dropping

marginally to 950p; we reiterate our Buy recommendation.

Having been an analyst early in my career, I can tell you that target prices are more an indication of confidence in a recommendation, loosely backed up by 'valuation', and that they are typically on a rolling 12 month view. This means that they are subject to frequent change. In this case, I expect upward revisions as and when newsflow gives a good excuse.

Following Ceres Power’s recent capital markets day (CMD) on 15 April, we

reflect on the significant positive momentum in the long-term structural

trends and increasing demand for solid oxide fuel cell (SOFC) technology.

We believe that the urgent need for modular, reliable, behind-the-meter

power solutions has been powerfully validated by recent industry

announcements, such as Bloom Energy's strategic partnership with Oracle.

Ceres’ CMD highlighted that its new Endura stack could be a game-changer,

offering market-leading technology that its global partners can

manufacture and sell directly into this fast-growing market. Given the

improvement in long-term structural trends, we adjust our back-end

forecasts for growth from 2030 onwards, while leaving our near-term

estimates unchanged. We also roll forward our DCF, resulting in an increase

in our price target to 980p. We highlight the potential for additional share

price momentum from further industry news, the announcement of a new

manufacturing licence partner (MLP), or capacity announcements/updates

from any of Ceres’ current partners (including Weichai, Delta and Doosan).

● Beneficiaries of the AI and data centre power race: We think that Ceres and

its partners are strategically positioned to solve the critical time-to-power

challenge for the AI and data centre boom. With traditional grid connections

facing delays of at least five years and gas turbines sold out into the next

decade, Ceres’ SOFC technology offers an alternative on-site power solution.

This provides an attractive backdrop for Ceres’ partners to scale up

manufacturing capacity towards the end of the decade, providing potential

additional royalty revenue for Ceres. Additionally, the quickly evolving

market provides a constructive backdrop for the addition of new MLPs.

● Market-leading technology at the heart of Ceres’ offering: Ceres’ Endura

stack is a pivotal development and provides partners with a product

designed for mass manufacturing. The robustness of the technology, ultra-

low-cost materials and lower temperature (operates at 450-630°C) allow it

to be cost competitive and at a 1GW scale – the company estimates that the

cost of manufacturing its stacks is one third lower than for its competition.

Importantly, the Endura stack is modular and built to scale, and supports

high-voltage data centre architecture up to 800V and beyond.

● Long-term demand shift in SOFC: The market for SOFC is rapidly

expanding, validated by major deals such as Bloom Energy’s 2.8GW

agreement with Oracle and the acceleration of projects, such as Project

Jupiter (Oracle’s microgrid in New Mexico, which is supported by up to

2.45GW of Bloom Energy's fuel cell capacity). We think that this signals a

definitive shift towards SOFC as a mainstream, reliable power source for

energy-intensive industries. The total addressable market is estimated at

22GW by 2030, split across data centres and other industrial uses

Today's trading statement mentioned that the rollout with Marshall's will be delayed from Q2 to H2. Very marginal, but it means FY26 profits will be a bit below previous expectations. Nothing else has changed and news from the US is promising. Berenberg, for one, remains buy rated with a target of 670p per share. Adding more, for what its worth.

Just to point out that it is JP Morgan Securities, and not JP Morgan Investment Management, that has increased its stake, and materially. The transactions will be on behalf of its prime broking customers, hedge funds, who are going long. It cannot lend these shares to HFs to go short, although if it had been JPIM increasing its stake then they could lend them to shorters. Overall, this should be positive, but it is not quite the same as a big long-only institution significantly increasing its stake as HF holding periods are usually much shorter.