Alelion’s Q2 figures were largely in line with our expectations. Sales was slightly lower than expected due to delivery-postponements, coming in at SEK19m relative to our estimate of SEK22m and SEK24m in Q2 2022. EBITDA was better than expected, SEK-9m relative to our estimate of SEK-13m (which was also the same in Q2 2022). This was driven by a higher gross margin than expected, equivalent to 38% relative to our estimate of 35% (31% in Q2 2022) which was driven by price increases carried out during Q1 and Q2. Lower OPEX than expected also helped the EBITDA beat.

In its Q2 report, Alelion states that component shortages for Alelion and among its customers negatively affect the pace of deliveries. Even if Alelion can deliver to its customers, shortages of other components make it impossible for Alelion’s customers to complete and deliver its vehicles to its end customers. This is further driven by just-in-time manufacturing, where OEMs do not want to build “unnecessary” inventory levels of components. As such, we tune down our growth expectations for H2 2023 and expect the remaining 2023 order backlog to be somewhat pushed into 2024.

Alelion carried out a rights issue in Q3 that was subscribed to 70%, leading to gross proceeds of SEK55m. In the prospectus, Alelion stated SEK77m would be sufficient to fund the working capital requirements for the coming 12-month period, and we, therefore, expect additional capital (equivalent to the difference between the outcome and the SEK77m, ie SEK25m) needs to be raised within the coming 6-12month period to fully fund Alelion’s growth initiatives and working capital needs. Despite estimate changes where we push the sales curve going forward, our fair value range remains intact at SEK0.1-SEK1.3 with a base case of SEK0.5 per share.