This is a big one i think. If it goes to plan i think its a game changer. Just need to see the coverage guys start a re rating of the company now (wh ireland used a discount factor of 11% and divided the last number by 4 for luck - on top of that we are 18m along from the last valuation and the"carry" increase is 50m give or take . It should demonstrate a big uplift in valuation (not like we have seen it in the stock price yet lol)
W H Ireland should be revising their target price on AMTE which will be quite supportive - last was 284 ish and they never budged despite the flurry of positive news. Additionally the next piece in the puzzle is a deal with a big customer that can capture peoples imagination. Hopefully that happens soon. Another point to make is its refreshing they could finally indicate the sheer size of the pipeline (200m) which i think has escaped markets. My understanding is each MOU are potentially huge - however given there are 2 parties involved (AMTe + customer) - due to the customers interests AMTE is categorically NOT allowed to give quanta on the deal. At some point the penny needs to drop that there is not a huge leap of the imagination for AMTE to hit this 200m pa sooner rather than later - each customer is large enough to make a dent. Market just needs to twig. With regards to funding most of the fit out will be assets and asset finance so it should be balance sheet driven/financed rather than intangible "runway". Not all fund raises are created equal so even though the to raise is big this will all be assets (worst case can be sold back). Provided the fundraise < grant+asset value then this fundraise will create value rather than really dilute existing shareholders. I'm optimistic - as mentioned before just need to see the proper financing details for the factory.
RE: Appointment of joint broker….10 May 2022 12:04
I think the new broker has been on the cards for a little while. The coverage and value promotion is not really up to scratch with the current broker set up. RE: the giga factory - i think this is a non issue. The main mechanics to fund a factory involve getting credit ,grants and the final piece equity. This can not happen however until there are orders to scale into as no one will extend credit to build a factory without them (the factory will not be built on spec). If we get enough orders that production needs to move form the BIC/Thursoe to a privately held giga factory the turnover/value/equity price will be sky high. There will be no gigafactory without the orders - and the fact they are talking about the gigafactory still is v promising as it means it is likely they have the order book to get the credit. Secondly the equity dilution once a raise is done will not be begligible but the value creation from the grant to build out and gearing from the debt to buy will likely be a net positive. Main issue now is riding out the big picture macro mess until these deals get to a stage they can be announced and hit the press - providing it is all going to their planned roadmap that is
Agree. As mentioned in my last post , momentum has now flipped. Both price action and news flow is pretty bullish so think this will be the theme going forward and each bit of news should be increasingly more positive
I think the 2 watersheds were the end of the lockup period (mid March) which had the risk of introducing new sellers into the market - that would keep new buyers away. Additionally we are now seeing more updates. I think in general there are just no more excuses to sell - so flipped on its head there are only excuses to buy. Reckon we reach 95p over the next week or two and we get confirmation of the dead cat bounce not being a thing and people will pile in - particularly now trading volume is picking up. The drift from now on provided a) prompt communication b) reasonable adherence to business plan will be back up. Only my views
4) AMTE is NOT about lithium ion and should not be valued or thought of in such a commoditised way. AMTE is not in the business of mass commoditised production or risky chemistry research and development. Instead it is about commercialisation of viable next generation chemistries to a market fit. Effectively they find a need in the market , see if there is a viable chemistry that solves the need and then AMTE licences it and then produces a lot of IP in the manufacturing and scaling machinist area to fit the need and scale required. It is a coincidence that current solutions involve lithium ion. Grid storage for example needs sodium ion. Down the line if opportunities exist with a new chemistry , AMTE will be at the forefront of commercialising it with the opportunity in mind and likely will have a first mover advantage. The fortunes of this business are not linked to the ups and downs of the lithium battery market. 5) The valuation methodology for AMTE was very very conservative. In the IM from WH Ireland they go over the approach to its valuation. They use conservative growth estimates and discount with 11.5% per (on conservative number). The value they get is 302m. They then literally divide by 4 for luck (I’m not joking). To give you an idea to force a valuation to 81m via discount factor is to use a 24% assumption not 11.5%. Furthermore , we are now 1 year further along. Changing nothing and rolling cashflow 1y just moves the W H Ireland valuation up from 81m to 90m and on the 11.5% discount factor we get 339m. Point is time is money and the discounts put into the business currently are crazy.We are a year further along and these cashflows are closer to realisation. “In summary We believe the unrisked (conservatively using a 11.5% cost of capital) value of AMTE’s portfolio of battery cells to be worth £344m, and with the inclusion of its research services (+£6m) and the subtraction of central sales, marketing and administration costs (-£48m), we see a net unrisked valuation of £302m. By applying the success/risk weightings described above, we derive a risked valuation range of present cashflows of between £70.12m and £104.5m. Taking into account estimated net cash of £11m as at March 2020, we derive an equity valuation range of £81.0m to £115m, with a mid-point of £98.2m.” WH Ireland 12th Mar21 I hope this helps and good luck.
On that note having been invested since 2014 I felt it would be a good idea to answer some misconceptions I have seen on this dealer board 1) IMPORTANT! Consistent with the mixed up communication since going public, AMTE ALREADY CLOSED A DEAL before the IPO – this is public knowledge but so badly communicated. They did not emphasise it and I don’t feel it was put in the forefront properly in the IM. It is likely a similar quanta as other opportunities being chased and once online will materially move the turnover. I suggested it is in AMTEs interest to maybe go back and communicate this deal more clearly in a way that can satisfy investors. On the AMTE power admission document page 15 “Ultra Prime is the subject of AMTE Power’s first commercialisation contract, a seven-year development and supply agreement with a UK based, international, Tier 1 oil and gas industry equipment provider. The Company has agreed to develop and, subject to the achievement of milestones, to supply to the customer battery cells which can be manufactured at the Company’s Thurso facility. The Company is also in discussions with a potential customer in the defence market concerning Ultra Prime.” That is a real 7y contract. 2) This is an elephant hunting business . The deals in this space are generally huge in the millions to 10s of million per year. When a pipeline of 79 odd deals is mentioned (WH Ireland research 17th November21) you should remember each supply deal alone could be worth upward of 10m a year. As these deals close the topline revenue will move hard and fast – that’s why this is fast growth. 3) The company sells complex bespoke solutions for good and bad. The margins are much higher than in a standard lithium ion business but the sales cycle is very slow. This is evident in the current turnover. The sales cycles h mentioned in point 2 have been going on for a few years now and should be maturing shortly. That is why the turnover looks low despite the progress this business is making. Once all of the boxes are ticked these deals should hit and ramp up
I am a founding investor at AMTE and looking through these comments I felt it would be worthwhile to let you know my thoughts. 1) Communication has not been made in a manner consistent with AMTE being a listed company. I have communicated this and they have assured me this is a serious focus for them. The issue is it takes time to onboard the new PR team as this is a complex business but I have been assured the communication will be improving shortly. I also highlighted the immediate need to address the current lack of information which is concerning everyone currently. It is my hope they address this and then lay out a strong communication strategy going forward that keeps us more in the loop with the companies progress. 2)I communicated they need to make a point of just what the quanta of these deals in AMTEs space are. One of the core reasons I have been so excited by this business is this is wholesale to wholesale. The ticket sizes in this business are in the millions per annum to tens of millions per annum. This is not a small ticket accrual business. To make this point I have suggested that they communicate in a more quantitative manner so people that don’t understand this business start to understand just how big the growth curve could be.