VSA Capital Market Movers – TInvinity Energy Systems


Invinity Energy Systems#: Interim Results H1 2021

Interim Results H1 2021

TInvinity Energy Systems (LON:IES), this week issued Interim Results for the 6 months ending June 2021 (1H21). IES’s Vanadium Flow Battery (VFB) technology is patented, fully developed, in manufacture and targeting the global high-growth stationary storage market that underpins grid stability as renewable energy grows. Siemens Gamesa, a global leader in renewable energy has validated the technology and potential and entered into a joint development agreement to develop next generation VFBs, intraday multicycle generations of which work alongside Lithium-ion installations or replace them. This is no early stage, prototype level, technology company. IES is now at commercial product level with technology thoroughly evaluated by Siemens. IES is a fully developed technology asset, that has inherent value.

Near Term Headwinds

2021 was set to be the year that IES moved to production scale and grew sales, however, the company is in the midst of one of the worst global supply line environments for many years. IES reported a 1H21 operating loss of GBP8.8m and cash reduced to GBP6.1m at the end of August 2021. This has impacted sentiment and the IES share price has fallen. Shipping costs have risen dramatically, steel prices increased, road transport costs and capacity has been restricted, semiconductors shortages are well documented. Customer activity has been slowed through COVID manpower limitations on the ground. All have hit IES as near-term headwinds as a smaller company. History of economic cycles shows that supply, manpower and cost headwinds will reverse over time and provide IES with the opportunity to significantly scale.

Target Price and Recommendation

We have made changes to our forecasts, detailed overleaf, reflecting the latest published information, guidance from IES but also considering inflationary pressures and supply chain disruption impacting production and logistics near term. Our long-term view remains unchanged; IES faces a compelling opportunity for long duration, multi cycle, battery storage supporting the global transition to renewable energy generation.

We reiterate our Buy recommendation although our target price is revised to 249p/sh.

Phil Smith, Transitional Energy Analyst | T: +44 (0)20 3617 5187 | E: [email protected]

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