LION E-Mobility looks set to report Q3 results on November 11th, which should confirm that the company has passed the operational trough. Here is what to expect:

Following a challenging FY24 with a mere € 17m sales (-70% yoy), sales in H1 already stood at € 10.4m, +70% yoy. Thanks to better order momentums at key mobility customers, the group’s top line should show further consecutive improvement during H2. Revenues in Q3 are seen to come in at around € 6m (eNuW: 9M sales of € 16.4m, +32% yoy). At the same time, EBITDA is expected to be positive at € 0.2m (eNuW: 9M sales of € 0.5m vs € -6m in previous year) due to continued tight cost control and an improving top line. Taking into account the expected 9M results and further improvements during Q4, LION’s FY25e guidance of € 28-35m sales and “clearly positive EBITDA” looks achievable, in our view (eNuW: € 32m sales and € 0.3m EBITDA).

Looking beyond FY25, LION is seen to remain on a growth path driven by both segments, Mobility and Storage. Here is why:

Mobility: To recap, LION operates a state-of-the-art factory, capable of an annual output of some 40k battery packs, which is currently highly underutilized due to cautious order behaviour and several insolvencies amongst customers during the past two years. Yet, the tide is turning as (1) the competitive landscape has consolidated and (2) key customers such as Karsan from Turkey are quickly expanding their customer basis.

Further, the anticipated launch of the new NMC+ battery pack, which offers a significantly higher energy density compared to the current version, should allow LION to address a broader set of potential customers. Importantly, we would also expect most of the company’s existing customers to switch to the NMC+ pack going forward.

Storage: In April this year, LION entered into a strategic partnership with LeapEnergy in order to secure access to assembled BESS solutions (i.e. large number of LFP-based battery packs installed in TEU containers). Combined with LION’s internal integration and service know-how as well as market access, the company is able to offer a one-stop-shop solution to the rapidly emerging energy storage market. For instance, LION already announced a partnership with Münchner Solarkraftwerke, which currently has a pipeline of over 40 large-scale hybrid (PV + BESS) projects. The biggest bottleneck should be grid connection approvals, hence why we expect potential revenue recognition from the Münchner Solarkraftwerke partnership to span over several years, starting with H2 2026. Still, sales from the Storage segment are seen to account for roughly a quarter of group sales in FY25e and could reach half in FY26e.

Overall, LION looks set to be able show notable top line growth for several year thanks to its unique set up and a growing project pipeline, which should enable sustainable cash generation and hence also turn the balance sheet around. BUY with an unchanged € 2.90 PT.