Intelligent Energy Holdings: Strong Y-o-Y Revenue Growth
Edison | May 22, 2015 12:52AM ET
Strong year-on-year revenue growth
Intelligent Energy Holdings' (LONDON:IEH) interim results show strong revenue growth, driven by the DP&G division, which provides power asset management services for telecoms tower sites in India. The division has recently announced agreement in principle on a contract that will more than double the number of telecoms towers under management and substantially improve divisional margins. We leave our estimates unchanged and revise our valuation range to reflect a weakening in fuel cell share prices since our April initiation note.
DP&G division drives strong revenue growth
Group revenues for H115 rose by £23.9m ($37.3m) year-on-year to £27.4m ($42.7m). The majority of this increase was attributable to the £23.7m ($37.0m) revenues from the DP&G division. It did not begin commercial power management activities until the very end of March 2014, yet had more than 10,000 telecoms towers under management by the end of March 2015. Revenues from the Motive division were 5% higher year-on-year at £3.7m ($5.8m). Revenues from the Consumer Electronics division, whose first product was launched in November, were not material. Group EBITDA losses, adjusted for an IFRS 2 charge and oneoff fund-raising costs increased from £16.7m ($26.1m) to £23.7m ($37.0m).
Key strategic milestones reached
The first Consumer Electronic product, the Upp hand-held fuel cell for charging mobile devices, was launched in Apple (NASDAQ:AAPL)’s UK stores in November. After the period end, the Motive division announced a joint development agreement with an Asian OEM, increasing the number of active customer engagements to four. The DP&G division announced an agreement in principle with GTL to acquire long-term contracts to supply power to more than 26,000 telecom tower sites in India. This agreement underpins our FY15 estimates, more than doubling the number of sites under management and thus divisional revenues, and substantially improves divisional margins. Successful execution of this contract underpins our FY15 forecasts so we leave our estimates unchanged.
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