Uncertainty triggers fear, yet equally fear offers opportunity for risk-tolerant, patient investors.
Why? Well, inevitably during times of maximum stress, ‘babies get thrown out with the bathwater’. The trick being to identify those super-durable, long term winners offering outstanding growth potential at compelling prices.
One such company being Saietta Electric Drive. A pioneering EV firm commercialising its highly efficient, light-weight & low cost/maintenance Axial Flux electric motors. Crucial factors in order to improve battery life, driver experience, vehicle range/price & user adoption.
This morning the group released in line H1'22 results for the 6Ms ending Sept’21 (Re Sales £795k, 55% gross margins & £31.4m net cash). Saying that it “remained on track to ramp up UK-based production capacity to 100,000 units pa by 2024” - & was “busier now than at any time in its history”.
Sure these might be relatively modest numbers today. But acorns do grow into oak trees, and the opportunity is vast.
Indeed SED’s patented AF motors are ideal for powering not only the world’s 57m motorbikes, tuk-tuks & other 2/3 wheelers (eg India, China, etc) - as they transition to carbon-free, all-electric. But also being deployed in out-board motorboats (eg Holland), supercars & last mile delivery vehicles (eg EAV). Together an enormous 40m+ unit TAM by 2030.
There are a few other AF motor developers (eg Mercedes’ YASA division, REE Automotive, WHYLOT, etc), but once again I understand none have yet focused on 2/3 wheelers, since their unit costs are substantially higher.
So how big could #SED become?
Well hypothetically, if it were to win a 5% share (2m units pa) by 2030, then this could represent $60m-$90m of EBITDA. Which if rated on a 15x multiple, might theoretically produce a $900m-$1.35bn valuation: or equivalent to £7-£11/share vs 255p.
CEO Wicher Kist commenting: “We can now address a wider range of vehicle platforms from lightweight to commercial, and have recently launched our marine propulsion motors under the Propel brand. [Here we] continue to receive a large volume of sales enquiries from numerous OEMs wrt potentially material contracts.”
Elsewhere in Nov’21, #SED acquired the Netherlands based electric power train manufacturer e-Traction from distressed seller Evergrande New Energy Automotive for up to €2m. Not only purchasing top notch IPR (eg in-wheel tech), production and R&D capability at a knock-down price, but also accelerating its entry into HGV/commercial electric vehicles. To me, a fabulous piece of deal-making.