Edison Investment Research Limited
London, UK, 14 January 2022
Trackwise Designs (TWD): Connection under demanding conditions
Trackwise Designs has developed a proprietary, proven technology, IHT, for manufacturing extremely long, flexible circuits that can replace conventional wiring harnesses. This disruptive technology is applicable to many industries including electric vehicles (EVs), medical devices and aerospace. Since listing in July 2018, Trackwise has invested substantially in capacity, acquiring Stevenage Circuits in March 2020 and a new site in Stonehouse in April 2021. The new site is scheduled to commence production in Q122 as Trackwise starts deliveries on an order worth up to £54m from a UK EV manufacturer. The company has recently completed a fundraising programme raising £7.0m (gross) at 80p/share, primarily to provide the working capital supporting this capacity expansion.
Our peer multiples-based analysis shows that, after the substantial share price drop in December, Trackwise is trading on an EV/EBITDA multiple for year 2 that is in line with the peer average. However, in our view, the potential growth in sales and EBITDA associated with the electric vehicle opportunity may merit a premium to the sample average. Our scenario analysis examining what group revenues and profits would look like for different levels of utilisation of the new Stonehouse site shows that if a potential second line at the new Stonehouse facility was fully utilised, group revenues could reach c £62m, generating £12.9m EBITDA and £7.6m PAT.
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