ValueTrack
|
Initiation of coverage
|
28 February 2017
ENERGICA M.C.
VALUETRACK
Sector: Electric Motorcycles
Analyst
Marco Greco
Ready to scale up
Tel: +39 02 80886654
[email protected]
Skype: marco.m.greco
Fair Value (€)
Market Price (€)
High performing electric motorcycles manufacturer
Founded back in 2014, Energica Motor Company has a clear
mission in mind: to create high performance - high powered
electric motorcycles with top quality components.
Despite its young age, Energica has already gone a long way. Almost all the
R&D effort, models development, output capacity rollout and vendor
financing strategy has been finalised while network distribution set up is on
going and marketing activity is mounting. Everything is ready for sales to
scale up in the next to come Spring season.
KEY FINANCIALS (€m)
Energica’s motorcycles, EGO and EVA, share outstanding features: they use
lithium polymer batteries that support Fast Charge (from 0 to 80% in 30
min), are the first electric motorcycles with enabled ABS technology and can
reach a maximum speed of respectively 240 and 200 km/h. Moreover, the
innovative Vehicle Control Unit manages and monitors all relevant
components, continuously adjusting the power delivered by the electric
engine while riding.
Trendy, high-growing market
The e-PTW reference market is very promising, with growth rates expected
to be fostered by technological improvements, anti-pollution regulations,
fiscal incentives, enabling infrastructure expansion and changing lifestyles.
Within this scenario, we believe that Energica has a first mover advantage
since big players are still at a prototyping phase.
Financials: “Out of the red” by 2019-2020
We estimate Energica to achieve break-even at the Net Profit level with
2,000 units sold per annum and this should take place by 2019 or 2020.
Obviously the longer the loss-making period, the higher the amount to be
funded with additional resources.
Base case valuation at €4.1-€4.6 but time is crucial
Energica’s valuation is subject to a number of question marks regarding the
time (and the start-up losses) needed before reaching “maturity”. That said,
our valuation analysis points at a €4.1-€4.6 base case fair value but we note
that every year of delay in reaching “maturity” negatively affects this figure.
35.1
2016E
2017E
2018E
2.5
11.4
25.3
EBITDA
-2.5
-2.1
-0.6
EBIT
-4.1
-4.3
-3.3
NET PROFIT
-3.9
-4.1
-3.3
4.7
3.6
0.3
EQUITY (*)
NET FIN. POS. (*)
EPS ADJ. (€)
DPS (€)
High performance motorcycles
€3.01
Market Cap. (€m)
REVENUES
Waiting for Spring
€4.1-€4.6
-2.4
-2.9
-5.2
-0.33
-0.35
-0.28
00.0
00.0
00.0
Source: Value Track (2016E-18E estimates)
(*) Assuming a €3mn equity injection in 2017FY
RATIOS & MULTIPLES
REVENUES GROWTH (%)
EBITDA MARGIN (%)
2016E
2017E
2018E
341%
363%
122%
nm
nm
nm
NET DEBT / EBITDA (x)
nm
nm
nm
NET DEBT / EQUITY (x)(*)
0.5
0.8
nm
EV/SALES (x)
15.2
3.3
1.6
EV/EBITDA (x)
nm
nm
nm
P/E ADJ. (x)
nm
nm
nm
P/BV (x)
7.4
9.7
nm
Source: Value Track (2016E-18E estimates)
(*) Assuming a €3mn equity injection in 2017FY
STOCK DATA
FAIR VALUE (€)
4.1-4.6
MARKET PRICE (€)
3.01
SHS. OUT. (m)
11.7
MARKET CAP. (€m)
35.1
FREE FLOAT (%)
13.1%
AVG. -20D VOL. ('000)
15,620
RIC / BBG
52 WK RANGE
EMC.MI / EMC IM
1.91-3.82
Source: Stock Market Data
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ENERGICA
|
Initiation of Coverage
|
28 February 2017
|
Marco Greco
VALUETRACK
Executive Summary
Born to shine, born to grow
Energica Motor Company is a very young company - it was officially founded back in 2014 near
Modena, in the centre of the Italian motor valley - with a clear mission in mind i.e. to create high
performance / high-powered electric motorcycles with top quality components.
Energica Motor Company was born as a spin-off of CRP, a Group with an experience of more than 45
years in the world of Formula One alongside the major international teams and specialised in high
tech machining and 3D printing.
CRP group had started years before to accumulate knowledge and expertise on electric motorcycles.
Their first competitive superbike eCRP, arguably the ancestor of today’s Energica models, won the
2010 TTXGP European championship.
In 2016 the company was admitted to AIM Italia stock market and started the large-scale production
of high-end electric models EGO and, later on, EVA. Ahead there is the introduction of further models
maybe derived from EsseEsse 9, a concept now at development stage.
A promising market
The e-PTW reference market is unanimously viewed as very promising, with great foreseen growth
rates driven by a variety of supporting factors such as:
!
Technological improvements;
!
Anti-pollution regulations;
!
Fiscal incentives;
!
Charging infrastructure expansion;
!
Changing lifestyles and curiosity for a different riding experience.
Energica is a first mover, but big players are sounding the field
It has to be specified that e-PTW market is not homogenous, with a mass-market segment on the one
side of the range and a high-value segment on the other one, with interesting premium pricing and
performances. Energica naturally belongs to this second segment, called High-Powered Electric
Motorcycles (HPEM).
In the HPEM arena, Energica has for sure a first mover advantage. Indeed, such segment is for the
time being not so crowded, as we have found only some small (artisanal) companies already active
from a commercial point of view, while big (and potentially dangerous) players are still at a
prototyping phase.
Go to market strategy. Everything else done, now it is time to engage prospect
clients
Despite its young age, Energica has already gone a long way. Almost all the R&D effort, models
development, output capacity rollout and vendor financing strategy has been finalised while network
distribution set up is on going and marketing activity is mounting.
Completing the business network should also allow for a greater economic performance, particularly
in markets such as California, where potential customers are way more responsive to technological
innovation in the motorcycles industry.
Indeed, HPE motorcycles are strongly affected by both customers misleading perceptions on electric
engines and by comparison with traditional vehicles.
Until now, Energica has focused its resources on reaching outstanding performances of its vehicles
and addressing the main issues of electric motorcycles, like battery autonomy and recharging time. At
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ENERGICA
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Marco Greco
VALUETRACK
present, it is seeking to take advantage of the opportunities available in the market with new
innovations.
Alongside customer acquisition strategies, the company has started to carry out some customerfidelization initiatives (Value Promotion Plan), focusing on improving the riding experience (Fast
Charge Infrastructure Program) and making attractive price promotions for recurring customers
(Used Market Warrantee + Agos commercial partnership).
Financials: “out of the red” by 2019-2020
We believe Energica has potential to become a “growth company” over the next foreseeable future,
thus completing its ramp-up phase and starting making money. We expect cash generation to be
negative until break-even sales volumes are reached, which we believe to happen in 2019-2020.
Our base-case estimates foresee Energica reaching EBITDA breakeven, selling ca. 1,300 bundles
(motorcycle plus spare parts), between 2018 and 2019. In the same period, OpFCF should turn
positive, ending eventually the cash absorption phase of the lifecycle.
Given this turning point, we see the company ending 2019 with € 60.8mn revenues that imply more
than EBIT breakeven and positive cash flows.
We underline that the company is aware of its funding needs. Indeed Energica is actively raising
additional sources of funds, such as:
!
Shareholders’ loan;
!
New credit lines;
!
Recently issued bonds and warrants (see the recent deal with Atlas Capital Market).
In this regard, the shareholders’ loan may be seen as a positive signal of confidence.
We also note that in our financial model we are including a ca. €3mn capital injection aimed at
ensuring a balanced Debt to Equity ratio.
The main risk we see is a possible delay in market demand growth that would lengthen Energica’s
loss-making period. This would potentially lead to a greater funding gap to be covered with additional
resources.
!!!!
Many thanks to Matteo Abate, Adalberto Natoli and Gabriele Ramaioli for their support in writing
this equity research report.
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ENERGICA
|
Initiation of Coverage
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28 February 2017
|
Marco Greco
VALUETRACK
Valuation
As a matter of fact, Energica for the time being can be considered an early stage / expansion company
whose valuation is obviously subject to a number of question marks regarding the time (and the startup losses) needed before reaching “maturity”.
In these cases we believe it’s appropriate to run multiple valuation methodologies in order to have a
robust cross check. In particular, we apply two main methodologies:
! Discounted Cash Flow model returning a €4.1 fair value per share in our base case.
! Valuation at maturity i.e. the so-called Venture Capital method driving a ca. €4.6 fair value
per share which is heavily dependent on the time needed to get to maturity.
Discounted Cash Flow Model
Applying a DCF model to a young company such Energica can be a tricky exercise due to the number
of possible pitfalls to be taken into consideration, the main one regarding a proper WACC calculation.
WACC estimated at 13.7%
With a “less is more” approach in mind and contrary to what we are used to, in the case of Energica we
prefer applying a Fixed Weighted Average Cost of Capital rather than a Rolling one and to base it on a
desirable 20% Debt / 80% Equity structure.
Overall, we calculate a 2017E-2027E average fixed WACC at 13.7% that could be seen quite high but
properly includes, in our view, the fact that small and new businesses are riskier (higher risk of
mortality). Our 13.7% WACC assumes:
! 2.02% risk-free rate obtained as 2014-16 historic average of Italian 10y BTP yield;
! 7.95% Equity Risk Premium (ERP), obtained from the sum of the current 5.69% implied ERP
for the “benchmark country” (United States, calculated with an implied Dividend Discount Model
being applied to S&P500 market value) with an additional 2.26% Italian “country risk premium”
reflecting the higher risk of the Italian equity market and mainly based on the spread between
Credit
Default
Swaps
on
Italian
sovereign
debt
vs.
US
one
(see
also
http://pages.stern.nyu.edu/~adamodar/ for more details on this approach);
! Stable beta at 1.20, higher than 1.0 for the whole market as the car / motor manufacturing
business boasts a higher than average cyclicality;
! 4.2% Small-Size Risk Premium, in line with the Expanded CAPM approach that we consider
more appropriate when dealing with small sized (and young) companies. This add-up is, in our
view, appropriate also taking into account the low liquidity of AIM Italy Stock Exchange. Such a
low liquidity often leads to sluggish price adjustments, partially hindering the market efficiency.
Cost of Equity: Small size premium determination
CRSP Deciles (*)
Equity Cost of Capital
(%)
Risk-Premium Report
CAPM +
CAPM
Size
Fama-French
CAPM +
Build Up
Premium
Size
Average
Build Up
5-Factor Model
Premium
Large Composite
7.3
7.0
7.8
8.4
9.7
5.8
7.7
Small Composite
7.9
10.8
10.4
13.9
12.6
12.6
11.9
Small Size Premium
0.6
3.8
2.6
5.5
6.8
6.8
4.2
Source: Duff & Phelps, Value Track Analysis
(*) Chicago Booth, the Center for Research in Security Prices
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ENERGICA
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Initiation of Coverage
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Marco Greco
VALUETRACK
! 6.0% credit spread (i.e. 8% Cost of Debt before tax) almost in line with the implied cost of Atlas
Capital Market convertible bond recently agreed;
Energica: Fixed WACC calculation based on a 80% Equity and 20% Debt structure
Average 2017E-2028E
Risk free
2.02%
Risk Premium
7.95%
Beta
Small-Size Risk Premium
1.20
4.20%
COST OF EQUITY
15.8%
COST OF DEBT (after-tax)
5.50%
WACC
13.7%
Source: Various, Value Track Analysis
Additional DCF assumptions
We are rolling out our DCF based on the above-mentioned WACC and on the following assumptions:
! 2016E year-end as historical reference point;
! Explicit period of ten fiscal years. As a consequence we discount company’s estimated cash flow
from 2017E until 2027E years;
! Terminal Value, (to account for future cash flows beyond the explicit period) obtained applying a
target 8.0x EV/EBITDA multiple, then discounted as of today with the same 13.7% WACC;
! Once obtained the 100% fair Enterprise Value of Energica, in order to derive the fair value of the
100% of Group’s Equity we deduct the estimated Group’s Net Debt position as of 2016YE and the
€3.0mn equity capital injection that we are modelling in our base scenario.
Overall, our DCF model returns a €4.1 per share fair value.
In addition, based on our estimated cash flows 2017E-2027E and making some reverse engineering we
calculate that the average fixed WACC implied in the current market capitalization stands at 16.4%.
Energica: DCF value calculation
PV of future cash flows (2017E-2027E)
32
PV of Terminal value
24
Fair Enterprise value
57
Net Fin. Position 2016E Year-End
-2.4
Estimated Equity Capital Injection
-3.0
Fair Equity value
Shs. (m)(*)
Fair Equity Value p.s.
51
12.6
4.1
Source: Value Track Analysis
(*) Based on a €3mn rights issue at €3.0 market price
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5
ENERGICA
|
Initiation of Coverage
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28 February 2017
|
Marco Greco
VALUETRACK
Valuation at maturity
The Venture Capital method was first described by professor Bill Sahlman at Harvard Business School
back in 1987. This model is based on three main steps:
Step 1 - Estimating the expected financial KPIs of the target company in a future year (not too far into
the future, generally from three to five years);
Step 2 - Applying traditional valuation techniques (e.g. Peers’ Analysis) in order to figure out a post
money exit value for the forecast period. For instance, it can be used a geared multiple such as PriceEarnings or alternatively an ungeared multiple such as EV/Sales or EV/EBITDA;
Step 3 - Converting the post money exit value into a present value by applying a considerably high
discount rate in order to capture both the perceived risk in the business and the likelihood that the
firm will not survive.
Step 1 – Maturity means €100mn revenues, €15mn EBITDA, €9-12mn OpFCF
We define “maturity” the time in which Energica achieves a level of ca. 4,500-5,000 units of electric
motorcycles sold per annum. This level of production would saturate the current maximum output
capacity without setting up a new factory. Based on these volumes and making some assumptions we
would have the following financial KPIs:
!
Revenues – Assuming no change to the current average €20,000-22,500 selling price such a
“maturity” would mean ca. €100mn yearly Revenues.
!
Gross Margin - In our financial model base case (see the Financials chapter) we assumed a
Gross Margin progressively increasing to 22%. Given that batteries represent the highest weight
on variable costs and that is reasonable to assume a declining cost trend for them in the future, we
would not be surprised to see such a Gross Margin increasing up to 25% at maturity, equalling a
€25mn Gross Profit.
!
EBITDA - As far as EBITDA is concerned, even at maturity we would expect Marketing and R&D
costs to grow in line with revenues while G&A should stabilize. Overall, these costs could weigh
some 10% of Revenues. Consequently, “maturity” EBITDA could stand at ca. €15mn.
!
Capital expenditure - We remind that the recently set-up new plant boasts a maximum output
capacity of roughly 5,000 units with very limited development capex. As a consequence we believe
that maintenance capex at 3% of sales would be reasonable.
!
Net Working Capital – At a steady state it should not be a further drain of cash flows so we
assume it to remain stable.
!
OpFCF - We obtain an Operating Free Cash Flow ranging in the €12mn (before tax) and
€9mn (after tax) region.
Energica: Main Financial KPIs at maturity
€mn
Revenues
Gross Margin (%)
Gross Profit
G&A, R&D and Marketing Costs
EBITDA
% Revenues
100
25%
25
-10
15
15%
Capex
-3
Operating Free Cash Flow pre-tax
12
Operating Free Cash Flow after-tax
9
Source: Value Track analysis
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ENERGICA
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Initiation of Coverage
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28 February 2017
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Marco Greco
VALUETRACK
Step 2 – Valuation at maturity at ca. €140mn (Enterprise Value post money)
In order to figure out a post money exit value we can run different comparable analysis based on
alternative set of potential peers:
! Motorcycle sector trading multiples;
! Motorcycle sector M&A transactions multiples;
! Clean Power / Clean Tech peers’ analysis;
! Benchmarking with Tesla.
Taking all these methods into consideration we would find appropriate maturity multiples in the
region of 1.4x EV/Sales and 9.0x EV/EBITDA which imply a €140mn fair Enterprise Value,
post money (i.e. post capital injections).
The various methods are explained in details in the following paragraphs.
Motorcycle sector trading multiples
In order to obtain a reasonable Energica fair value at maturity, we have taken into consideration the
following comparable companies almost entirely focussed on the motorcycle business in Italy and in
the USA:
!
Piaggio;
!
Polaries Industries Inc.
In addition, as an “aspirational” reference point we can also include Harley-Davidson in our
comparison.
For all of them, we computed the following multiples referred to the expected results in 2017 and
2018: EV/Sales, EV/EBITDA, P/E, Operating FCF Yield.
Energica: Motorcycles manufacturers stock multiples
EV/Sales
Company
EV/EBITDA
EBITDA Margin
P/E
OpFCF Yield
2017E
2018E
2017E
2018E
2017E
2018E
2017E
2018E
2017E
2018E
Piaggio
0.70
0.70
5.6
5.1
13.3%
13.5%
17.6
12.6
5.3%
6.6%
Polaris Industries
1.28
1.24
9.4
8.6
10.7%
11.3%
19.2
16.5
9.1%
10.3%
Average
0.99
0.97
7.5
6.9
12.0%
12.4%
18.4
14.6
7.2%
8.4%
Harley-Davidson
3.03
2.96
12.8
12.3
20.8%
21.1%
14.7
13.7
9.7%
9.4%
Average with Harley-Davidson
1.67
1.63
9.3
8.7
14.9%
15.3%
17.2
14.3
8.0%
8.8%
Source: Market Consensus figures, Value Track analysis
Motorcycle sector M&A transactions multiples
A further cross-check on the above mentioned multiples can be obtained if we compare them with
multiples applied in market transactions with comparable companies. As an example, we believe that
Investindustrial-Ducati deal back in 2008 can be a useful reference.
At that time, Investindustrial launched a voluntary bid for Ducati at a price implying 1.2x EV/Sales
and 7.7x EV/EBITDA and we note that Investindustrial was already the main shareholders.
Later on in 2012 Ducati was sold to Audi in a deal worth ca. €860mn and implying 1.8x EV/Sales
and 9.1x EV/EBITDA multiples.
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7
ENERGICA
|
Initiation of Coverage
|
28 February 2017
|
Marco Greco
VALUETRACK
Clean Power / Clean Tech peers’ analysis
Rather than comparing Energica with other motorcycle manufacturer, a different angle is provided by
the comparison with companies active in the Clean Power / Clean Tech space.
Among the various indexes tracking this investment theme, we can underline Kensho’s Clean Power
IndexSM, which actually accounts for the market performance of almost thirty Clean Power / Clean
Tech companies, among which Tesla is included.
Despite we do not estimate a significant correlation between Energica and Kensho’s Power Index
returns (regression analysis not statistically significant), we note that such cluster trades at healthy
multiples: EV/Revenues 2.2x-2.4x, EV/EBITDA 8.9x-9.5x, P/E 17.4x-17.7x. Please see
Appendix for the complete set of data on stocks belonging to this Index.
Kensho Clean Power / Clean Tech IndexSM
Source: Kensho Technology
Benchmarking with Tesla
We believe that Energica share some features with Tesla (not the size obviously) such as the high end
positioning, the 100% oil-free mobility concept and an extremely high technological profile. The
addressable market and the average client profile should not be that different.
Tesla: Quarterly vehicles deliveries
Source: Tesla Inc.
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ENERGICA
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Initiation of Coverage
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28 February 2017
|
Marco Greco
VALUETRACK
Assuming Tesla as a future reference benchmark could be a useful exercise. We note that the company
is expected to boost its sales over the USD20bn level by 2019, corresponding to ca. 500 thousand cars
delivered by that year, hence achieving volumes as close as five-fold today’s level.
In the same year we expect Energica selling slightly more than 4,000 motorcycles i.e. a ratio between
Tesla cars sold and Energica motorcycles higher than 100:1.
Tesla: Annual and cumulated vehicles deliveries
Annual vehicles deliveries
Cumulated vehicles deliveries
Source: Tesla Inc., Market Consensus
Stock market wise, Tesla is still trading at start-up metrics and only as of 2019 we calculate reasonable
multiples: 2.0x EV/Sales and 13.7x EV/EBITDA and its market capitalization should reflect ca.
USD90k per car sold.
Tesla Inc.: Main financial and stock market KPI
(US$mn)
2014
2015
2016E
2017E
2018E
2019E
Sales
3,599
5,292
7,000
9,994
15,942
22,555
31,655
50,618
78,604
235,812
471,624
499,921
284
213
630
1,036
1,671
3,253
52
-209
-317
-51
317
1,344
Market Capitalization
27,900
31,400
34,500
44,059
44,059
44,059
Enterprise Value
28,402
32,877
34,265
45,495
45,674
44,600
Volumes (units sold)
EBITDA
EBIT
EV/Sales (x)
EV/EBITDA (x)
P/Volumes (‘000 USD)
7.9
6.2
4.9
4.6
2.9
2.0
>100
>100
>50
>40
27.3
13.7
881
620
439
187
93
88
Source: Tesla Inc., Market Consensus
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9
ENERGICA
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Initiation of Coverage
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28 February 2017
|
Marco Greco
VALUETRACK
Step 3 - Discounting back Energica’s value at maturity yields a €4.6 fair value
per share but downside risk is not negligible
Having obtained such results, we have taken into consideration also the timeline necessary to arrive at
maturity for Energica and its risk profile, so the required internal rate of return to achieve that
valuation.
For this analysis, we assumed three different periods at which maturity can be reached: 2020 or 2021
or 2022.
Considering the risk profile of Energica, we use three IRR settings in our analysis: 20%, 25%, 30%,
that are consistent with investments in early stage / expansion phases where there’s a deep pocket
main shareholder backing the target company.
Venture Capital Method: IRR target for different investment stages
Investment Stage
IRR
> 70%
Seed
Start-Up
50% – 70%
Early Development
30% – 40%
Expansion
20% – 30%
Source: VC market practice
We underline that 2020 at 30% IRR is our base case which return a €4.6 fair value per share.
We note that the current market price of Energica shares implies a 25% IRR @ 2021 or a 20% one at
2022. Time is crucial.
Energica: IRR Equity Valuation Matrix
(€mn)
2020 (*)
2021 (**)
2022 (***)
20%
76
55
41
25%
66
45
31
30%
58
37
23
Source: Value Track analysis
(*) Based on a €3mn rights issue at €3.0 market price
(**) Based on a €9.9mn rights issue at €3.0 market price
(***) Based on a €12.4mn rights issue at €3.0 market price
Energica: IRR Equity per share Valuation Matrix
(€ per share)
2020 (*)
2021 (**)
2022 (***)
20%
6.0
3.7
2.7
25%
5.3
3.0
2.0
30%
4.6
2.5
1.5
Source: Value Track analysis
(*) Based on a number of shares post €3mn rights issue at €3.0 market price
(**) Based on a number of shares post €9.9mn rights issue at €3.0 market price
(***) Based on a number of shares post €12.4mn rights issue at €3.0 market price
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ENERGICA
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Initiation of Coverage
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28 February 2017
|
Marco Greco
VALUETRACK
Company Overview
Energica was established in 2014 in the Italian motor valley, as a spin-off of CRP Group, aiming at
designing and developing high performance and high-powered electric motorcycles with top quality
components.
Back in 2016 Energica was admitted to AIM Italia stock market and started the large-scale
production of high-end electric models EGO, its limited edition EGO45, and, later on, EVA. Ahead
there is the introduction of further models, whose development goes through constant research and
concept development, such as the recently unveiled EsseEsse9.
Energica Motor Company at a glance
Launched back in 2009 as a project within CRP Group, the mission of Energica Motor Company is to
create high-performing electric motorcycles with the best innovative elements, top-of-the-line
components, high attention to details, entirely Made in Italy.
In this way Energica, which is headquartered in Modena i.e. in the centre of the Italian Motor Valley,
aims at becoming the reference firm in the e-Powered Two Wheeler (e-PTW) industry in the next few
years with revenues coming from Europe, United States of America and Middle-East countries.
The structure of the Group is extremely simple as it includes the parent company (Energica Motor
Company S.p.A.) and the US subsidiary (Energica Motor Company Inc.).
The current shareholders’ structure as well is quite simple with CRP Group controlling over two thirds
of the share capital while some top managers (Mr Andrea Vezzani, CFO and Mr Giampiero Testoni,
CTO) and free float account for the remaining.
Such a shareholders’ structure could change in case of conversion of outstanding IPO warrants, issue
of bonus shares and, eventually, issuance and conversion of bonds / warrants privately placed to Atlas
Capital Market (ACM) Fund recently i.e. on February 15, 2017. Please see Appendix for more details
on the ACM deal and on the possible evolution of capital structure.
Energica Motor Company: Current shareholders’ structure
Shareholders
Shares (#)
Stake (%)
9,045,000
77.59%
Maison ER & CIE S.c.a
880,000
7.55%
Vezzani Andrea
100,000
0.86%
Testoni Giampiero
100,000
0.86%
Free-Float
1,531,500
13.14%
TOTAL
11,656,500
100%
CRP Group
Source: Energica
As far as Top Management structure of the company is concerned, key figures are: Franco Cevolini
(Chairman), Livia Cevolini (CEO), Andrea Vezzani (CFO), and Giampiero Testoni (CTO). Again, please
see Appendix for more details on Top Management composition.
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A bit of history
The very first step of Energica Motor Company starts as a project called ENERGICA, back in 2009 and
launched from CRP Group that has more than 45 years of experience working in motorsports,
especially in Formula One racing, and providing high-tech and innovative components to the leading
international teams.
In 2009, CRP Group decided to apply its know-how and consolidated experience in Motorsports to the
development of an electric superbike, the eCRP, which a year later in 2010 won the TTXGP European
championship and ranked 2nd at the same TTXGP World Final held in Albacete.
After that, CRP Group invested significant resources to create an all-electric motorcycle to be used on
the roads and at EICMA 2011 its very first prototype, called Energica, was presented. In the wake of
this success, CRP presented its running prototype of Energica and then its first model Energica EGO
in 2012 and 2013, respectively.
In order to complete the development of the final version of EGO concept, Energica Motor Company
Srl was founded on August 26, 2014.
In October of the same year, with the aim of increasing its internationalization process, Energica
Motor Company Inc was established in California, thus consolidating operations in America siding
CRP USA that was yet in place by that time.
During the EICMA event in 2014, Energica presented the final version of EGO, EGO45 and a new
concept, called EVA.
In 2015, the company obtained the certifications required to market its models in the European Union
and USA market and so the production of the EGO and EGO45 started.
On September 30th, 2015, CRP Meccanica Srl conferred, through a capital increase operation, some
assets to Energica in order to support its forthcoming production activity; these assets were functional
to the activity of R&D, production and market and they included trademarks, patents and prototypes.
The total amount of the contribution to Energica was estimated at €4.8mn.
2016 was a busy year. On January 29th, 2016, Energica was listed on AIM Italy stock (€5.3mn raised
with an initial market capitalization of ca. €37.3mn) and some months later it introduced in the
market the final version of EVA. Such efforts have been awarded on April 2016 with the grant of
“Electric Vehicles” IDTechEx 2016 award in Berlin as “Most Impressive New Company”.
Products portfolio: EGO and EVA
So far Energica has brought to the market two motorcycle models: EGO, which includes its special edition
EGO45, and EVA. In addition to these vehicles, during EICMA 2016 Energica has presented a new concept,
EsseEsse9, embedding a completely new idea for electric vehicles: using the battery as a design tool.
Meanwhile, Energica is already developing a new technological platform designed to expand, among
others, its power train solutions. This may eventually lead to further models development as well.
Most of the components used by Energica are shared among EGO and EVA, which enable a significant
increase in efficiency of the production line even at low volumes. The main features shared are:
Weight and Battery - All Energica vehicles weigh approximately 280 kg and they all use a lithium
polymer battery (Li-NMC) that takes 30 min to charge from 0 to 80% in Fast Charge Mode and 3
hours and 30 min from 0 to 100% in Slow Charge Mode.
Connectivity - The interconnection of all products enables the rider to connect the vehicle with
smartphones, tablets or computers using short range Bluetooth technology and, in the next future, it
should be introduced also a long range UMTS technology.
Components - Energica utilizes high quality suppliers: the breaking system comes from Brembo, the
ABS technology from BOSCH, the suspensions from Bitubo Race while tyres are from Pirelli.
Pricing – The street price for EGO and EVA stands at €25,400+VAT, while EGO45 starts at
€45,000+VAT and raises with optional and specifications.
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Energica EGO
EGO model represents the first all-electric superbike made in Italy powered by a synchronous oilcooled motor with permanent magnets that produces 100 kW (136 hp) and generates 195 Nm of
torque from 0 to 4700 rpm.
The breaking system of EGO is equipped, for the first time on an electric motorcycle by default, with
the latest generation of the ABS system by BOSCH.
While other traditional vehicles have control units that work separately on all controllers, EGO’s
battery, inverter, charger, dashboard, ABS, and other components, are constantly monitored and
managed by one technological device that is completely designed and developed by Energica, the
Vehicle Control Unit (VCU).
By using a multi-map adaptive energy and power management algorithm, the VCU continuously
adjusts the power delivered by the electric engine while driving.
Since Energica EGO does not have a gearbox nor a clutch, the ride-by-wire system has been
implemented in order to enable the rider to control the acceleration torque and the deceleration based
on the regenerative torque or engine braking.
Energica EGO can be recharged through outdoor charging columns or at home, and it is the first
motorcycle to be equipped with a DC fast-charge technology based on CCS Combo, which is the
standard chosen by all the main car manufacturer worldwide.
EGO by Energica: Main Technical details
Energica EGO
Top Speed
Limited to 240 km/h
Autonomy
Ca. 150 km
Weight
280 kg
Fast Charge
0-80% in 30 min
Slow Charge
0-100% in 3 hours and 30 min
Source: Energica
Energica EGO (in Lunar White colour)
Source: Energica
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Energica EVA
EVA is an all-electric streetfighter introduced in 2016 that allows Energica to enlarge its customer
base. Unlike the EGO model, the design of EVA makes it easier to ride for everyday riders and also for
a urban use, but still enjoying a more aggressive riding.
The electric streetfighter of Energica is powered by a permanent magnet AC (PMAC) oil cooled motor
that produces 70 kW (95 hp) and 170 Nm of torque. Thanks to the Eco Riding Mode, the average
autonomy has been extended, compared to the EGO models, to 200 km and in Sport Riding Mode the
electric vehicle can reach a top speed of 200 km/h.
EVA has a lithium polymer battery (Li-NMC), managed by the Battery Management System (BMS)
that takes 30 min to charge from 0 to 80% in Fast Charge Mode and 3 hours and 30 min from 0 to
100% in Slow Charge Mode. Together with EGO, Energica EVA features DC fast-charge technology
based on CCS combo. Similarly, EVA can be recharged through outdoor charging columns or at home.
EVA by Energica: Main Technical details Main Technical Sheet
Energica EVA
Top Speed
Autonomy
Limited to 200 km/h
Ca. 200 km in Eco Mode
Weight
280 kg
Fast Charge
0-80% in 30 min
Slow Charge
0-100% in 3 hours and 30 min
Source: Energica
Energica EVA (in Dark Blue colour)
Source: Energica
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Energica EGO45
The electric superbike EGO45 is a limited edition of the EGO model to celebrate the 45th anniversary
of the manufacturer CRP Group. This exclusive version is produced as a numbered series of 45 units
with the aim of bringing together luxury and high-tech.
EGO45 features exclusive components like design elements obtained from the aerospace industry and
Formula One Racing, carbon fibre fairings and other components realized with 3D printing technology
and Windform materials covered with a ceramic finish.
In addition to the special materials used in EGO45, there are also exclusive services provided. For
example, it is possible to request delivery at Energica factory, where clients can enjoy a tour of each
step followed in the creation of EGO45, from 3D printing to the final assembly of the parts. Moreover,
EGO45 can be fully customized to specific needs or choices with the collaboration of design experts.
EGO 45 by Energica: Main Technical details
Energica EGO45
Top Speed
Limited to 240 km/h
Autonomy
Ca. 150 km
Weight
280 kg
Fast Charge
0-80% in 30 min
Slow Charge
0-100% in 3 hours and 30 min
Source: Energica
ENERGICA EsseEsse9 CONCEPT
The EsseEsse9 is a concept presented by Energica for the first time during EICMA 2016, which is still
under development and may potentially lead to further product advancements. The revolutionary
design of the vehicle wants to change the idea of a hidden battery inside the vehicle and spoil it as a
piece of design that can be easily noticed.
Energica ESSE ESSE 9 Concept
Source: Energica
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Market Overview
The global market for Electric Motorcycles is extremely promising, with great foreseen growth rates
driven by a variety of supporting factors such as technological improvements, anti-pollution
regulations, fiscal incentives, enabling infrastructure expansion and, last but not least, changing
lifestyles and curiosity for a different riding experience.
The market is not homogenous, with a mass-market segment on one side of the range and a highvalue segment, with interesting premium pricing / premium performances, on the other one.
Energica belongs to this second segment, called High-powered electric motorcycles (HPEM).
Markets and segments
A niche in the niche
The global market for Electric Vehicles (EV) counted for more than $80bn in 2015 (source: BCC
Research), and is expected to grow up to $110bn by 2019 with a ca. 8.5% CAGR.
Obviously, the most relevant segment within this market is represented by Electric Cars that totalled
more than 325 thousands new registrations in 2014 and more than 550 thousands in 2015, with a 70%
increase YoY. China with over 200,000 new registrations is the largest market followed by USA.
Alongside cars, the electric Powered Two Wheel segment (e-PTW) is also noticeable with around
5.2mn vehicles circulating in 2015. This segment can be broken down as follows:
! Electric scooters;
! LPEM - Low-powered electric motorcycles (<30 kw; (40 HP));
! HPEM - High-powered electric motorcycles (>30 kw; (40 HP)).
e-PTW segmentation and forecasts
(mn)
2015
% of total
2024E
% of total
e-scooters
4.00
78.0%
4.53
75.5%
LPEM
1.14
21.9%
1.36
22.7%
HPEM
0.01
0.1%
0.11
1.8%
Total
5.2
100%
6.0
100%
Source: Navigant Research, Electric Motorcycles and Scooters – Market Drivers and Barriers, Technology Issues, Key Industry
Players, and Global Demand Forecasts- 1Q 2015
Energica Motor Company operates in this last HPEM segment of the market, and focuses only on its
high-end section, addressing wealthy and sophisticated clients.
As an effect of the elitist profile of Energica’s value proposition, which targets a niche market, broad
trends of growth are not very relevant, and consequently we prefer to focus only on high-powered
electric motorcycles segment, which is expected to grow rapidly in the next years (estimated CAGR
ranging between +45% and ca. +50% depending on the source, i.e. Navigant Research or Technavio Global High-performance Electric Motorcycle Market 2016-2020).
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HPEM market: Forecasted evolution 2016E-2024E
‘000 units
Source: Navigant Research
As far as geographic trends are concerned, we note that while Asia regions (APAC) accounts and
should continue to account for the nearly entirety of e-scooters segment, on the contrary West Europe
accounts for roughly half of HPEM segment. But again, APAC is expected to be the fastest-growing
region in this segment and is expected to grow at a > 56% CAGR by 2020 (source: Technavio - Global
High-performance Electric Motorcycle Market 2016-2020).
Macro Trends
All the segments of the Electric Vehicles market share common macro trends, (even though the growth
rate is not similar). Among these trends, we can identify:
! Growing R&D investments, with focus on battery capacity, new technologies and scale economies;
! Increasing competition, with rising attention coming from “traditional” players in non electric
industries;
! Decreasing prices, as an effect of technological advancements and scale economies;
! Tendencies toward high gamma and leisure.
Growth divers
The aggressive growth forecasted for the next years, is rooted in both general drivers and regionspecific ones, since each geographical market has its own peculiarities. The main general divers we can
identify are:
! Cost reduction, supported by an increasing dimension of the players and industrial improvements;
! Increasing autonomy of the vehicles, strictly correlated with technological advances and expansion
of the charging infrastructure;
! Increasing attention to renewables and sustainability themes.
The sustainability driver is much more pronounced in the APAC region, where pollution alarms are
already of great actuality. In this same area, another big driver is the demographic growth, as more
than half of China’s 2-wheeler stock is already electric (223 million units according to IEA, 2016).
Conversely, in the European and North American countries, the changing lifestyle plays a central role
for the development of e-PTW vehicles, together with not negligible environmental concerns.
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Enabling factors and constraints
While all the previous considerations are valid, it is our opinion that the pace of growth of electric
vehicles adoptions will be dictated in first place by the evolution of a few key factors of extreme
importance. As often happens, they are closely related each other.
Battery capacity and cost
Low autonomy and high prices of electric vehicles have always been pointed out as primary obstacles
for a mass adoption. Both features depend on the batteries, as their cost is about 40% of the total cost
of production (source: Navigant Research).
However, since 2008 both the energy density and the cost for batteries experienced an impressive
improvement (respectively, 400% growth and 73% reduction) and future estimates are quite
optimistic as well with different manufacturers that have provided aggressive estimates pointing at a
cost <100$/kWh by 2022 (source: GM, 2015, EV Obsession, 2015) or <100 by 2020 (source: Tesla,
HybridCARS, 2015).
Please note that the above-mentioned data refer to PHEV batteries (Plug-in Hybrid Electric Vehicle),
but they are very similar also for BEV (battery electric vehicles), as the previous estimates by GM and
Tesla refer actually to BEV batteries.
Batteries energy density and cost
2008
Energy density of PHEV batteries (Wh/L)
Cost of PHEV batteries ($/kWh)
2015
2022E
60
295
400
1000
268
125
Source: US DOE
Diffusion of charging infrastructures
We strongly believe that more capillarity of the charging stations (EVSE – electric vehicle supply
equipment), together with improved batteries, may be the turning point for a widespread adoption of
EVs. Indeed, the so-called “range anxiety”, i.e. the fear that a vehicle has insufficient range to reach its
destination, is among the biggest limiting issues for electric vehicles, as the charging points are much
less expanded than traditional gas stations.
Obviously, homologation is welcomed for the development of these infrastructures. Recently, the
International Electrotechnical Commission came out with international standards for electrical vehicle
fast charging protocols. These standards are called Open Charge Point Protocol (OCPP), which are
interoperable, and provide a relative alternative to the existing charging systems based on different
technologies (source: Technavio - Global High-performance Electric Motorcycle Market 2016-2020).
Fast charging and slow charging outlets, publicly available, totalled respectively 162 and 28 thousand
units in 2015. Their average growth indicates that both types almost doubled on an annual basis in the
past five years.
Publicly accessible charger evolution by country
(number of units)
2010
2011
2012
2013
2014
2015
Slow chargers
5,018
13,957
31,253
44,976
93,789
161,802
Fast Chargers
524
2,018
4,876
7,475
16,948
27,707
Source: IEA analysis
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The following graph provides also indications of the geographical distribution of public charging
stations, both for fast and slow chargers.
Geographical distribution of the 2015 stock of EVSE outlets by charger type
Source: IEA analysis based on EVI country submissions, complemented by EAFO (2016).
International and national policies
To understand the role of regulators in the development of EV markets, we have to differentiate the
type of policy adopted: regulations, direct investments and incentives. About national direct
investments and incentives, we provide here a state-of-the-art table summarizing the policies adopted
nationwide (N) or targeted (T) by the main nations, and the number of charging stations (EVSE).
Summary of policy support mechanisms for EVSE deployment
Direct Investments
Fiscal Advantages
Publicly accessible
Public
Private
Public
Private
EVSE (# per mn
Chargers
Chargers
Chargers
Chargers
inhabitants)
Canada
T
T
98
China
N
N
42
Denmark
N
France
N
Germany
N
67
Italy
T
29
Japan
N
Netherlands
N
Norway
N
N
N
N
309
N
N
159
N
174
N
T
1084
1372
114
Portugal
Spain
T
Sweden
T
United Kingdom
T
United States
N
N
35
175
N
155
N
N
97
Source: IEA – Global EV outlook, 2016
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In general terms, regulations always set limits of pollution (e.g. limit the CO2 from the current 135
g/km to maximum 95 g/km by 2020 and 70 g/km by 2030), or targets for the development of the
charging infrastructure. For example the EU Directive on the deployment of alternative fuels
infrastructure (2014/94/EU) calls for a number of publicly accessible points capable of ensuring that
EVs can circulate at least in urban and suburban agglomerations (EC, 2015, 2014).
Targets should ideally foresee a minimum of one recharging point per ten electric vehicles (EC, 2014).
Earlier proposals of the European Commission included an EU-wide target of 800,000 publicly
accessible chargers and a total of 8 million chargers by 2020 (EC, 2013).
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Energica Competitive Positioning
Energica has for sure a first mover advantage in the High Powered Electric Motorcycles arena. Such
a segment is for the time being not so crowded as we have found only some small (artisanal)
companies already active from a commercial point of view while big (and potentially dangerous)
players are sounding the electric market only with prototypes.
Market Players
The competitive landscape for Energica currently shows the presence of a few small players
characterised by strong technological innovation and, sometimes, also by an innovative design
approach. The key vendors already active in the market from a commercial point of view are:
! Energica Motor Company;
! Zero Motorcycles;
! Polaris, which acquired the motorcycles division of Brammo (it recently experienced some
problems, see the description below for details);
! Lightning Motorcycles (please note that it still does not have confirmed homologations in USA nor
EU or others);
! BMW but limited to maxi-scooter for the time being;
! KTM but limited to off-road motorcycles.
On top of these ones, we also hint at a few additional artisanal players such as Sora Electric Motorcycles,
Saietta Motorcycles, Brutus Electric Motorcycles and Tork Motorcycles. These companies are currently
producing on a very tiny scale but it is possible that the expected declining costs of Li-NMC batteries and
powertrain components coupled with the wider availability of recharge points and increasing driving
autonomy will give them the required incentives to increase their market presence.
Main Electric Motorcycles competitors to Energica
Source: Various
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Profile of some Electric Motorcycles competitors to Energica
Company
Zero Motorcycles
Description
Californian manufacturer that introduced its first electric prototypes back in 2006. Currently, the company
produces six all-electric models: Zero S (60 hp), Zero SR (70 hp), Zero DS (60 hp), Zero DSR (70 hp), Zero FX
(46 hp) and Zero FXS (46 hp), all boasting less extreme performances if compared to Energica’s models.
Prices range from US$8,495 for the Zero FX model to US$15,995 for the Zero SR and DSR ones.
Brammo Electric
Oregon based manufacturer that has been bought by Polaris Industries Inc. in 2015, year in which it unveiled
Motorcycle division
the Victory brand. In 2016, the company launched in the market the electric vehicle Victory Empulse TT with
54 hp and a base price of US$19,999. Compared to Energica, Brammo provides electric vehicles at lower
prices but with inferior performance results. Recently (Jan 2017), Polaris announced that it is shutting down
the Victory Motorcycles brand.
Lightning Motorcycles
Californian manufacturer founded back in 2006. After taking the first place among all motorcycles, gas and
electric, at the 2013 Pikes Peak International Hill Climb, in 2014 they started to develop the LS-218 model
powered by a lithium battery with 200 hp and a declared top speed of 350 km/h that makes it the fastest
electric motorcycle ever produced. The starting selling price is US$38,888 but, compared to Energica,
homologations are not confirmed.
Lito Green Motion Inc.
Canadian company founded back in 2009 that produces the all hand-built Lito Sora electric motorcycle. As
for now, Lito Green Motion Inc. represents an artisanal factory that operates in a limited area with very high
range prices (starting from US$77,000 USD for the base model and from US$104,000 USD for the Signature
Series.
Saietta Motorcycles
Manufacturer of electric motorcycles formed in 2015 from the merger of Agni Motors and Agility Global. The
group includes three independent divisions: Saietta Motorcycles, Saietta Racing and Saietta Engineering. The
all-electric Saietta R model, presented for the first time in 2013 by Agni Motors, is powered by an electric
engine that generates 97 hp and top speed of 130 km/h; the price range starts from GBP19,770.
Brutus Electric Motorcycles Brand founded and managed by the American family-owned business Bell Custom Cycles (BCC). It produces
hand-built electric vehicles with prices that start from US$26,490 (Brutus V2 Rocket with 130 hp), US$32,490
(Brutus V9 with 125 hp) and US$45,000 (Brutus 2 and Brutus 2 Cafè with 130 hp).
Tork Motorcycles
Indian based start-up that is launching to the market T6X, an electric motorcycle for urban commuters with
reduced performance (top speed 100 km/h) and very low prices (INR124,999 INR which is approximately
GBP1,500). The company has setup a production plant with a capacity of 50,000 units per year at Chakan,
near Pune, and aims to sell 10,000 units in the first year. We view such a project as a low cost – low
performance one so not directly competing with premium producers such as Energica.
Source: Various
Together with these smaller vendors, other big brands are sounding the HPEM segment. HarleyDavidson, for instance, back in 2014 displayed to media its first new electric prototype, called
LiveWire, and then, in 2016, confirmed a launch within 2021.
Yamaha as well unveiled a couple of electric prototypes PES2 and PED2 back in 2013 and again in
2015.
Last but not least in February 2017 two big brands such as Hitachi Automotive Systems and Honda
Motor, signed a memorandum to form a joint venture in order to develop and produce electric engines
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that could be implemented not only for car production but also for motorcycles. In 2011, Honda Motor
presented an electric prototype, called RC-E, in Tokyo and so, it is possible to suppose that the future
joint venture could be useful even to complete the development of an electric motorcycle for the
market.
Energica positioning
As far as Energica’s competitive positioning is concerned, we view it as a premium brand in the High
Powered Two Wheels Market, i.e. potentially competing with KTM and Harley Davidson (or with the
Italian Ducati if we want to remain in the Italian motor valley), but avoiding direct competition as it is
specialised in innovative electric motorbikes.
On the other hand, Polaris, with the acquisition of the motorcycles division of Brammo, represents the
first mass market player that enters the electric market, suggesting that there is a growing interest
towards the sector of electric vehicles.
Competitive Landscape for High Powered Motorcycles
Source: Various
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Energica’s Go to Market Strategy
Having almost finalised its research and development activity, Energica should now attempt at
consolidating its market positioning in the forthcoming years. Brand awareness and customer
acquisition, through specifically designed marketing investments, are crucial to fill the existent production
capacity with substantial future sales. Completing the business network should also allow for a greater
economic performance, particularly in markets such as California, where potential customers are way
more responsive to technological innovation in the motorcycles industry. The multi-channel marketing
strategy, paired with attractive initiatives for the clients’ benefit (see the vendor financing strategy),
introduces the complementary perspective of customer fidelization.
Research and Development: Done (Patents, Acknowledgments)
Acquiring competencies and know-how, to both enhance existing products and create new ones,
represents the core activity to which Energica is committed. Indeed, since inception, development
activities have been particularly devoted at achieving the best innovative product possible, focusing
on:
!
Improving the driving performance, for example by reducing motorbikes weight;
!
Refining aerodynamics features and racing abilities;
!
Discovering new technical solutions.
With effective and efficient commitment, Energica has been able to deliver so far consistent results
from its research activities, which can be summarized, for instance, by the following patents (whose
final registration has to be completed, according to IPT procedures):
!
Supply Unit – US Patent;
!
ABS – International Patent;
!
Design – International Patent;
!
Brand – Energica is a registered brand in Brazil, Canada, Europe, Japan, South Korea, and USA;
!
CPU – International Patent.
Driven by daily efforts and exploiting its management expertise, Energica is now able to handle an
impressively updated product. Indeed, apart from the continuous elaboration of new products and
concepts, most of the workload ahead should be dedicated to both the vehicle structure and the
software infrastructure improvement, which still offers a plenty of opportunities and upcoming
technologies to exploit, as well as to benefit from their integration.
For instance, potential benefits should be delivered to customers from a fully connected framework
among vehicles, in which data could provide them with substantial advantages (e.g. improved on-theroad assistance). Moreover, vehicles distributed from 2020 should carry a new technological platform
and superior batteries, whose suppliers have already been chosen in July 2016.
Last but not least, since 2015 Energica is also part of the TAAPS project (Trusted Application for
Open Cyber Physical System), developed in cooperation with several among research centres and
technologies developers, and financed by the European Commission. Energica is also associate
member at CMC (Connected Motorcycle Consortium) and is part of CharIn (Charging Interface
Initiative Association founded by Audi, BMW, Daimler, Mennekes, Opel, Phoenix Contact, Porsche,
TUV SUD, and Volkswagen). Moreover, Energica, together with ANCMA (Italian Motorcycle
Association), is constantly committed at developing new solutions and ideas to promote the Italian
electric motorcycles’ market.
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Marco Greco
VALUETRACK
Developing new applications to be tested and then fully incorporated into products such as Ego and
Eva models is the leading rationale, thus implying other possible favourable developments.
Particularly, aiming at providing customers with essential after-sales services.
Output Capacity: Already set up (new facility, output capacity stats, supply chain)
Energica has recently moved to its brand new 3,000 sqm-sized production facility in Soliera (Modena), at the
heart of the Italian Motor Valley, whose main features may be summarized as follows:
!
An assembly line of four workstations, scalable up to sixteen;
!
R&D activity-dedicated area;
!
Energica Lounge, an internal showroom space and the leading Italian point of sale;
!
Energica Museum, which allows visitors and potential buyers to trace past to present.
EMC: The brand new production plant – 1
Planimetry
Outdoor view
Source: Energica
EMC: The brand new production plant – 2
Assembly lines
Showroom
Source: Energica
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Marco Greco
VALUETRACK
What’s more important is that Energica’s production capability is now already set up and scalable with
extremely limited investments. Indeed, being provided with four workstations in its assembly line,
Energica’s current production capacity is close to 500-unit a year, which implies that 12 additional
workstations need to be added if the 2020YE 5,000-unit production a year target is to be met. To be
noted, each additional workstation requires only a few thousand euros to be set up. To this extent, no
infrastructural limitations should arise, hence allowing for an immediate productivity boost once the
ramp-up stage has been completely phased-out and sales are effectively sizeable.
Distribution network: Ongoing (local importers, dealers network, US subsidiary)
Delivering products globally requires the roll out of a widespread and segmented distribution network.
From this point of view Energica is signing agreements with both internationally located dealers and
local importers aimed at achieving distribution capillarity without the huge investments needed to set
up a proprietary retail network.
Importers differently represent a fundamental channel to access foreign markets, particularly in
Northern Europe. Part of the future strategy pursued by Energica in this sense will dedicate effort to
increase the portion of dealers than importers over the whole distribution network.
On top of that, a showroom has been established in California, which should be the direct bridge to the
set-up of a dealer network in America that is already underway.
Indeed, back in December 2016 Energica has received the approval by the Californian competent
authority to sell and directly register its products directly in the stores, thus obtaining what should be
considered a fundamental catalyst for future growth. The US indeed, and in particular California,
should represent the ideal market environment targeted by Energica, given both the positive attitude
and perception regarding electric vehicles and the availability of a solid chargers’ networks, which
should definitely avoid any unjustified anxiety.
EMC: Dealers & Importer Network as of January 2017
Country
Store
Location
Germany
Role
MMS Concept GbR
Osterode am Harz
Importer
Italy
Energica HQ
Soliera
Headquarter
Italy
Energica Lounge
Soliera
Showroom
Italy
MCWATT
Alessandria
Dealer
Norway
Carpoint
Fornebu
Importer
Portugal
ZEVtech
Camarate
Importer
Spain
Barcelona Green Electric Cars S.L.
Teià
Dealer
Spain
Ecomobility Green World, S.L.,
Sevilla
Dealer
E-MC Sweden AB
Marieholm
Importer
Switzerland
Extablish AG
Stans
Importer
Switzerland
Rolf Gall Superbikes AG
Bützberg
Dealer
Sweden
The Netherlands
Electric motorcycles Nederland
Eenrum
Importer
The Netherlands
Electric motorcycles Noord
Groningen
Dealer
The Netherlands
Electric motorcycles Oost
Dedemsvaart
Dealer
The Netherlands
Electric motorcycles Zuid
Sint Anthonis
Dealer
The Netherlands
Electric motorcycles West
Capelle aan den IJssel
Dealer
United Kingdom
Moto Corsa
Ashmore
Dealer
United States
Energica North America Operations HQ
Mooresville
US Headquarter
United States
Galleria Energica
San Francisco
Display
United States
Energica Sales & Service Centre
Redwood City
Dealer
Source: Energica Motor Company
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ENERGICA
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Initiation of Coverage
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28 February 2017
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Marco Greco
VALUETRACK
Marketing strategy: Ongoing
Improving customers’ acquisition strategies is expected be the core objective pursued by Energica for
the years ahead. So far limited benefits have been enjoyed in the domestic market indeed, while
greater satisfaction has been derived from foreign markets.
We hint that the three main marketing goals for the next future will be:
1.
2.
3.
Strengthening brand positioning and product reputation worldwide;
Increasing product perceptibility and penetration across customers;
Creating product affiliation so as to build long-lasting value.
Such goals are going to be pursued via both:
!
Off-line channels (ca. 85% of total marketing budget), including ad-hoc on-the-road activities,
such as events and test rides dedicated to prospect affluent clients, and;
!
On-line channels (ca. 15% of total marketing budget), including outright outbound activities, such
as socials, blogs, and newsletters.
EMC: Marketing Strategy 2017
Source: Energica Motor Company
As far as 2017 marketing action plan is concerned, its execution should rely upon:
!
Trade fairs (participation to international and national exhibitions, motorcycle or generic sector,
both in EU and USA);
!
Show tester and brand ambassador (eight testers both in EU and USA, focusing on testimonials in
key markets);
!
Long test media (long test ride with motorcycle and lifestyle magazine both EU and USA);
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Marco Greco
VALUETRACK
!
Product communication and promotions (ADV plan on-line and off-line in Europe and the USA
already planned);
!
Digital communication (improvement website SEO, social media communication and ADV);
!
Sales Dept. Promotions (Value Plan Promotion, Fast Charge Infrastructure Program);
!
Network and business development (improving and enlarging our existing dealer network).
The proof that Energica is aware of the necessity to further increase its marketing pressure comes
from the list of the 1Q 17 promotional events to which the company is attending or directly organising.
EMC: Marketing pressure is ramping up
Source: Energica Motor Company
Vendor financing strategy: Ongoing
Energica is also dedicating efforts to provide its customers with “tools” aimed at making the
motorcycle purchase more affordable and maintaining the value of the product over time.
The Value Promotion Plan
Energica Motor Company is boosting confidence in its products by rolling out a Value Promotion Plan
made of two programs:
!
Used market warrantee program;
!
Fast charge infrastructure program.
Used Market Warrantee Program - This program includes a package of measures to warrantee
the value of two years old Energica motorcycles. Such plan works as follows:
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Marco Greco
VALUETRACK
!
Opportunity to trade-in the used motorcycle in order to purchase a new Energica model with the
official dealer that will be responsible to evaluate the used motorcycle at 50% of the retail price
while, separately, Energica will issue a bonus reward worth €6,000 (VAT included) to final
customers as over-valuation;
!
Extended warranty of the battery up to 100.000 km or five years instead of the normal duration of
three years or 50.000 km.
The customer, after 23 months (24 months minus 1 as notice) from the motorcycle registration, can
choose one of the two measures proposed in the promotion plan.
The trade-in of the used motorcycle will be up to the local dealer that originally sold the bike while the
bonus reward will be paid directly from Energica Motor Company.
The plan is covered under the “sales support costs” approved in the official business plan.
Fast Charge Infrastructure Program - Concerning the value plan, Energica intends to deploy an
installation program of fast charge points on the most appreciated roads by motorcyclists. For
example, the first target roads that have been identified in Italy for the season 2017 consist of the
district area of Dolomiti, Lake of Garda and Liguria, whereas in California it has been considered the
Bay Area. A detailed plan on further international routes is still in process according to Energica
dealership network.
In general, the aim of this program is to fill the gap between the main roads on which automotive
industry and governments are investing and the roads where motorcyclists want to enjoy a riding
experience like mountains, hills and sea locations that are often far away from the main roads.
The fast charge installation project will be rolled out with the partnership of utilities, hardware
providers and charging services. Energica will either co-finance the installations of dedicated chargers
(DC technology 20kw, Combo CCS standard plugs) or facilitate the access to already available ones
with business initiatives. As an example, in the Netherlands Energica has signed an agreement with
Fastned Company to provide four years of free fast charge through their charging network with 20-30
average minutes of charging time.
The realization of the fast-charge installation project includes a multiyear plan with prospective
investment up to €1mn (starting from the Italian region and California in spring 2017) that will be
covered under the marketing budget.
Commercial Partnership with Agos
Energica has also reached an agreement with Agos in order to reduce financing costs for the purchase
of the electric motorcycle. In particular, the customer can choose between three different financing
solutions:
!
”Credito Classico”;
!
“Tasso Zero”;
!
“Maxi Rata”.
As an example: with the financing plan "Credito Classico" only the pre-payment of the VAT is required
and then monthly payments of €372 with no additional costs will be charged. The “all-in” total annual
percentage rate on the financing line stands at ca. 5.9%.
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ENERGICA
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Initiation of Coverage
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28 February 2017
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Marco Greco
VALUETRACK
SWOT Analysis
HPE motorcycles are strongly affected by both customers misleading perceptions on electric engines
and by the comparison with the traditional vehicles.
Until now, Energica has focused its resources to reach exceptional performances of its vehicles,
addressing the main issues of electric motorcycles, like battery autonomy and recharging time. At
present, it is seeking to take advantage of the opportunities present in the market with new
innovations.
Nonetheless, the growing interest for eco-sustainable vehicles and an increasing distribution of
charging points will help the company to debunk current perplexities on electric vehicles .
Electric Motorcycles versus Endothermic ones: Pros and Cons
Reasons for preferring Electric motorcycles
The demand in favour of electric vehicles can be, in our view, supported by these considerations:
!
Zero-impact on the environment. This is important given the growing interest to use eco-friendly
vehicles and the possible introduction of more restrictive emission controls on endothermic
engines;
!
Lower total “cost of ownership” mainly driven by lower maintenance and utilization (recharge)
costs for electric engines;
!
Constant torque generated already from 0 rpm;
!
Higher torque produced compared to an endothermic engine with same hp;
!
Absence of limitations on the use of electric motorcycles in the city;
Reasons for preferring Endothermic motorcycles
On the other hand, some common characteristics among electric vehicles are still reviewed as
drawbacks in the comparison with endothermic products:
!
The general conception that security and performance of an electric engine cannot match the
traditional engines in the market. It has to be said in this regard, that electric motors are actually
much more reliable and powerful than traditional ones. Indeed, the knowledge of the increased
performance, reliability and efficiency of electric engines compared to ICE (internal combustion
engines) is spreading among the general public;
!
The initial worries on the riding experience that could be too different from endothermic engines,
also because of peculiar loudness capacity and lack of the gear-box for high powered vehicles;
!
“Range anxiety” i.e. concern that the riding autonomy and life of the Li-ion battery deteriorate too
shortly;
!
Concern on possible deterioration of batteries over time (Battery life cycle);
!
Availability of recharging stations in the territory (in particular in countries, like Italy and Spain,
where little investments have been made on infrastructures) or possible failures due to their lack
of maintenance. Note that Energica is the unique EV Motorcycle with DC fast-charge technology
based on CCS Combo, which is the standard chosen by all the main automotive car manufactures
worldwide, and allows an 80% battery charge in 20 minutes.
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ENERGICA
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Marco Greco
VALUETRACK
Energica’s effort in order to push pros and mitigate cons
Providing answers and solutions to these critical elements represents a fundamental requirement in
order to increase the customer base of the companies that operate in the HPME segment.
As far as this point is concerned, Energica has focused its attention and efforts on the development of
specific technologies to address the issues shared by most of the electric vehicles. There is no doubt
that the contribution of know-how and technical support from the Group CRP has been and will be
also in the future a key value for Energica, especially for the activities of research and development.
Batteries
All the models produced by Energica are equipped with a lithium polymer battery (Li-NMC) that is
managed by the Battery Management System (BMS) and allows the vehicles to have an average of 150
km of autonomy with an average speed of 70 km/h. In addition to that, Energica reduced the time
needed to charge its motorcycles with a built-in fast charging system that enables a quick recharge
from 0-80% in 30 minutes. In this way, the rider can rely on both long-lasting batteries and the
possibility to spend less time charging the vehicle. In addition, Energica’s batteries have a lifecycle of
1200 cycles @ 80% capacity (100% DOD) and, abating any other potential concern on this topic, they
are guaranteed 3 years or 50,000 km (31,000 mi). Furthermore, the Value Promotion Plan offered by
the company includes an option for extending the battery warranty to 5 years or 100,000 km
(whichever comes first).
Charging stations
As for the distribution of charging stations, Energica will surely benefit from the increasing number of
charging stations that are going to be installed on the main roads. This trend has been particularly
clear in countries like Germany and France, whereas in other regions it is still a process under
development.
For example, the European Commission has officially launched in January 2017 an electric mobility
project, called EVA+ (Electric Vehicle Arteries), which will be carried out in Italy and Austria in the
next three years. The EVA+ project foresees the implementation of 200 multi-standard fast charge
stations on key roads and motorways, of which 180 in Italy and 20 in Austria, and is aimed at boosting
electric mobility especially beyond the limited urban area.
Still, Energica itself intends to deploy an installation plan of fast-charge points targeting the best roads
motorcyclists love to ride through, probably co-financing the installations of dedicated chargers (DC
technology 20kw, Combo CCS standard plugs) in partnership with several companies (Utilities,
Hardware provider, charging services). A detail plan on routes is in process according to Energica
dealership network, and a first round of installations has been identified in some locations in Italy and
in California to be deployed by 2017 season.
On top of that, we underline that Energica has developed a mobile app that provides bikers with
relevant information about the positioning of points of charge (and also a wide range of additional
useful information for travellers), realized by collecting data from major electricity providers in Italy
and abroad.
Riding experience
Concerning the performance of electric motorcycles, Energica has dedicated much attention to obtain
good feedbacks in terms of riding experience. All models produced are equipped with the Vehicle
Control Unit (VCU) that implements a multi-map adaptive energy, and a power management
algorithm that manages the electric motorcycle, carefully monitoring and adjusting the motor’s power
according to the throttle thrust 100 times per second while riding. Bikers that have ridden Energica
recognized its performance even without gears (not needed, as the motor has enough power to be
driven without need of gears and shifting), hence enjoying its comfort without giving up adrenaline.
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Marco Greco
VALUETRACK
One of the main critics that have been raised against electric vehicles is related to the too low levels of
loudness produced. To cope with that, Energica has implemented a system that makes loudness levels
comparable to those of a traditional motorcycle once higher speed levels have been reached.
We also note that Energica is dedicating much attention to further aspects in the “digital” user
experience field correlated to riding. Indeed, in the next future it is planning to introduce on its
vehicles a long range UMTS connectivity to control the motorcycle through smartphone, tablet or
personal computer.
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ENERGICA
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Initiation of Coverage
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28 February 2017
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Marco Greco
VALUETRACK
Financials 2015-20E
We believe Energica has potential to become a “growth company” over the next foreseeable future,
thus completing its ramp-up phase and starting making money. We expect cash generation to be
negative until break-even sales volumes are reached, which we believe to happen in 2019-2020.
In our view cash generation fundamentals are already set, margins and working capital dynamics
are solid and cost structure could potentially get more favourable once that production has reached
maximum capacity and suppliers bargaining power drops.
The main risk we see is a possible delay in market demand growth that would lengthen Energica’s
loss-making period. This would eventually lead to a greater funding gap to be covered with
additional resources.
Introduction
Energica Motor Company is substantially an “early stage” company. Everything is ready to enter the
market (R&D ok, Output Capacity is in place, Distribution Network is under construction, initial sales
have been finalized) but visibility is obviously not that high as the market proof is yet to come.
That said, we are modelling future possible financials with some “base case” assumptions and later on
we’ll make some scenario analysis.
The main assumptions and KPIs that we are going to explore are:
!
Revenue drivers (volumes, pricing, mix) and Revenues evolution;
!
Costs structure (COGS, R&D, Marketing, G&A);
!
Operating profitability evolution and break-even levels;
!
OpFCF and FCF drivers (CAPEX Plan, Working Capital) and evolution;
!
Sources and Funding analysis;
!
Capital structure.
Volumes
2017 should be the first year in which the company has the potential to fully exploit its potential. As a
base case we estimate 2017E sold units at ca. 400 up from the ca. 40 sold in 2016. Later on we expect
the company to roughly double its volumes year by year and to achieve roughly maximum capacity in
2020E. Overall we are assuming a cumulated ca. 8,000 units sold in the 2015-2020 period.
EMC: Motorcycle Sales 2015-2020E
In Units
Total Volumes sold
2015
2016E
2017E
2018E
2019E
2020E
8
ca. 40
ca. 400
ca. 950
> 2,300
> 4,000
Source: Value Track Analysis
In our view, growth should be mainly driven by increasing sales volumes in foreign markets (Northern
Europe and North America above all) while Italy (and Southern Europe as a whole) should maintain a
relevant but secondary importance in the foreseeable future.
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ENERGICA
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Marco Greco
VALUETRACK
EMC: Volumes breakdown by Geographic Region 2015-2020E
(% of total)
2015
2016E
2017E
2018E
2019E
2020E
Northern Europe
50
83
33
29
31
31
Southern Europe
50
14
8
12
14
14
North America
0
2
40
30
35
35
Eastern Countries
0
0
16
23
15
16
Rest of the World
0
0
4
5
5
5
100
100
100
100
100
100
Total
Source: Value Track Analysis
Volumes should be mainly driven by EVA, with the remaining portion derived from EGO and, on a
much more smaller scale, EGO-45 i.e. the limited edition version of EGO. We expect a third and a
fourth model to be introduced in 2020 once the new technological platform will be in places.
EMC: Volumes breakdown by Model 2015-2020E
(% of total)
2015
2016E
2017E
2018E
2019E
2020E
EGO-45
13
2
3
0
0
0
EGO
88
38
30
30
30
18
EVA
0
60
67
70
70
50
rd
0
0
0
0
0
32
100
100
100
100
100
100
3 -4th models
Total
Source: Value Track Analysis
Revenue Evolution and Assumption
Our base case scenario is carried out modelling revenues arising from both:
!
!
Motorcycles sales;
Parts and accessories.
We assume EGO and EVA to be sold at an average “dealer” price of €21-22k with parts and accessories
adding as much as ca. 20% of the revenues from Motorcycles.
As an effect we forecast sales to reach the €100mn region by 2020, assuming of course that our
volume estimates are met.
EMC: Average Revenues per motorcycle sold
(€’000)
2016E
2017E
2018E
2019E
2020E
Motorcycles USA
25.0
25.0
25.0
25.0
25.0
Motorcycles Rest of World
25.0
20.0
20.0
20.0
20.0
Motorcycles
25.0
22.0
21.5
21.8
21.7
Parts & Accessories USA
5.0
5.0
5.0
5.0
5.0
Parts & Accessories Rest of World
5.0
4.0
4.0
4.0
4.0
Parts & Accessories
5.0
4.4
4.3
4.4
4.3
30.0
26.4
25.8
26.1
26.1
Revenues from sales per unit
Source: Value Track Analysis
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Marco Greco
VALUETRACK
EMC: Revenues structure
(€mn)
2016E
2017E
2018E
2019E
2020E
Motorcycles USA
0.0
4.0
7.2
20.5
36.1
Motorcycles Rest of World
1.0
4.8
13.2
30.1
53.8
Motorcycles
1.1
8.8
20.4
50.7
90.0
Parts & Accessories USA
0.0
0.8
1.4
4.1
7.2
Parts & Accessories Rest of World
0.2
1.0
2.6
6.0
10.8
Parts & Accessories
0.2
1.8
4.1
10.1
18.0
Revenues from sales
1.3
10.6
24.5
60.8
108.0
Source: Value Track Analysis
Gross Margin Evolution and Assumptions
We are modelling a Gross Margin in the 20% region, initially a bit lower and then progressively
increasing thanks to cost efficiencies. This means some €5,000-€6,000 Gross Profit per unit sold.
In particular, we assume that generated Revenues are consistently translated into:
!
Ca. 18%-20% Gross Margin from Motorcycles;
!
Ca. 30% Gross Margin from Parts and Accessories.
EMC: Gross Margin Analysis
2016E
2017E
2018E
2019E
2020E
17%
17%
18%
19%
20%
Gross Profit per unit sold (€'000)
4.2
3.7
3.9
4.2
4.4
Gross Profit Motorcycles (€mn)
0.2
1.5
3.7
9.7
18.4
30%
30%
30%
30%
30%
Gross Profit per unit sold (€'000)
1.5
1.3
1.3
1.3
1.3
Gross Profit Part & Acc. (€mn)
0.1
0.5
1.2
3.0
5.4
19%
19%
20%
21%
22%
Gross Profit per unit sold (€'000)
5.7
5.0
5.2
5.5
5.7
Gross Profit (€mn)
0.2
2.0
4.9
12.8
23.8
Gross Margin Motorcycles
Gross Margin Parts & Accessories
Gross Margin
Source: Value Track Analysis
EMC: Motorcycles and Parts & Accessories 2019E Gross Profit and Margin Calculation
Motorcycles
Parts &
Bundle
Accessories
€’000
%
€’000
%
€’000
%
Sales price per unit (ex. VAT, net of Dealer’s fees)
22.0
100%
4.4
100%
26.4
100%
Variable cost per unit
-17.8
-81.0%
-3.1
-70.0%
-20.9
-79.2%
4.2
19.0%
1.3
30.0%
5.5
20.8%
Gross Profit / Margin per unit
Source: Value Track Analysis
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Marco Greco
VALUETRACK
R&D, Marketing, and G&A
In our view Energica should keep investing significant resources in R&D as well as Marketing
campaigns. More in details, we expect:
!
Ca. 3% of Revenues to be, on average, annually invested in R&D activities as the bulk of product
development has been already finalized also thanks to R&D investments and activities previously
funded by CRP during its incubation period;
!
Ca. 10% of Revenues to be, on average, annually dedicated to Marketing campaigns, thus
assuming the same commitment for the “go to market” strategy. We underline that this
percentage may vary as new opportunities arise and performance gets robust.
Last but not least, we also estimate average annual G&A expenses to stand in the low/mid-single digit
region (as a percentage of Total Revenues).
EBITDA and EBIT break-even dates and sensitivity analysis
Based on 2019E forecasted costs structure, we identify the following break-even points:
!
530 bundles (i.e. Motorcycle + Parts & Accessories) should allow Energica to reach break-even at
EBITDA before marketing costs;
!
1,300 bundles should cover also marketing costs thus leading to EBITDA break-even;
!
2,300 bundles should cover also D&A thus leading to EBIT break-even.
EMC: Break-Even Analysis @ 2019E
€mn, Bundles per Annum
Bundles sold
530
1,300
2,000
2,329
Revenues (VAT excl.)
14.0
34.3
52.8
61.5
-11.1
-27.2
-41.8
-48.7
2.9
7.2
11.0
12.8
-2.9
-2.9
-2.9
-2.9
0.0
4.3
8.1
9.9
Marketing Costs
-4.3
-4.3
-4.3
-4.3
EBITDA
-4.3
-0.1
3.8
5.6
D&A & Provisions
-3.5
-3.5
-3.5
-3.5
EBIT
-7.8
-3.6
0.3
2.1
Variable Costs
GROSS PROFIT
Fixed Costs (G&A, R&D)
EBITDA before Marketing Costs
As a % of Revenues
Bundles sold
530
1,300
2,000
2,329
Revenues (VAT excl.)
100
100
100
100
-79.2
-79.2
-79.2
-79.2
Variable Costs
Gross Margin
20.8
20.8
20.8
20.8
-20.7
-8.4
-5.5
-4.7
0.1
12.4
15.3
16.1
Marketing Costs
-30.7
-12.5
-8.1
-7.0
EBITDA
-30.6
-0.1
7.2
9.1
D&A & Provisions
-25.0
-10.2
-6.6
-5.7
EBIT
-55.6
-10.3
0.6
3.4
Fixed Costs (G&A, R&D)
Gross Margin after Fixed Costs
Source: Value Track Analysis
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36
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Marco Greco
VALUETRACK
Here follows a sensitivity analysis of EBITDA 2019E to changes in unitary Gross Profit and to volumes
sold. We remind that our base case calls for €5.6mn EBITDA (ca. 9% EBITDA margin) corresponding
to €5,500 unitary Gross Profit and 2,329 bundles sold.
EMC: 2019E EBITDA Sensitivity, €mn
Gross Profit Per Unit (€’000)
2019E
Bundles Sold
4.5
5.0
5.5
6.0
6.5
1,929
1.5
2.4
3.4
4.4
5.3
2,129
2.4
3.4
4.5
5.6
6.6
2,329
3.3
4.4
5.6
6.8
7.9
2,529
4.2
5.4
6.7
8.0
9.2
2,729
5.1
6.4
7.8
9.2
10.5
Source: Value Track Analysis
OpFCF evolution
Energica does not need remarkable capital expenditures for the years ahead. Its current production
infrastructure is substantially already provided with the facilities required to reach a very high output
and only limited expenditure (ca. €50k) should be required when production effectively ramps up.
That said, we believe volumes should be high enough to allow for cash generation only starting from
2019E. This implies, in our estimates, a cumulated €15mn OpFCF absorption at 1H19E when the
upward trend of the J-curve begins.
EMC: Operating Cash Flow Statement
EBITDA
Op. WC requirements / Chg. in provisions
Capex
Cash Taxes (VAT credits cash in if positive)
2015
2016E
2017E
2018E
2019E
2020E
-0.9
-2.5
-2.1
0.8
-0.9
0.9
-0.6
5.7
14.6
0.8
-2.4
-4.4
-0.8
-3.7
-2.5
-2.5
-2.6
-2.8
0.2
0.2
0.2
0.2
-0.1
-1.1
OpFCF a.t.
-0.6
-6.9
-3.5
-2.1
0.7
6.4
Cumulated OpFCF a.t.
-0.6
-7.5
-11.0
-13.0
-12.4
-6.0
Source: Value Track Analysis
EMC: OpFCF and Cumulated OpFCF
Source: Value Track Analysis
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37
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Marco Greco
VALUETRACK
Capital structure
Considering the increasing cash needs derived from the ramp-up losses, Energica is extremely active
in fund raising, along different directions:
!
Shareholders loan: the majority shareholder CRP Group has granted so far €3.8mn financing;
!
Credit lines: A couple of unsecured credit lines have been signed, maturity in the 4yy-5yy range,
and new VAT credits-backed financing lines should be available on a recurring basis from now on;
!
Bonds & Warrants: It has been recently signed an agreement with Atlas Capital Market for the
“on demand” issue of up to €4mn convertible bonds and up to €1.2mn worth warrants.
On top of the above-mentioned lines we calculate Energica to need ca. €3mn new equity injection
during 2017 fiscal year in order to maintain a balanced Debt to Equity structure. Again, a privately
placed “reserved” rights issue could be the ideal technicality to pursue.
EMC: Funding Plan
Date
Amount (€mn) Description
2015
€ 0.2 mn
Non-interest bearing shareholder loan granted by CRP Group
07/05/15
€ 0.25 mn
Unsecured 54 months loan (6 months grace period) @ 3m Euribor + spread
27/10/15
€ 0.40 mn
Unsecured 48 months loan (no grace period) @ 3m Euribor + spread
21/12/15
€ 1.5 mn
29/01/16
€ 3.85 mn
23/01/17
€ 2.3 mn
3% interest bearing shareholder loan granted by CRP Group
15/02/17
€ 4.0 mn
Convertible Bonds privately placed to Atlas Capital Markets (ACM)
February 2017
€ 3.0 mn
Possible new equity injection
Total
Non-interest bearing shareholder loan granted by CRP Group
IPO proceeds (€5.3mn minus €1.45mn IPO expenses)
€ 15.5 mn
Within 15/10/2018
up to € 4.8 mn
1,128,250 Warrants expiry 15/10/2018 conv. 1:1
Within 2022
up to € 1.2 mn
10 Warrants privately placed to ACM expiry 5yy conv. 1:28,169
Total with warrants
€ 21.5 mn
Source: Value Track Analysis
EMC: Structure (and evolution) of Net Financial Position
(€mn)
2015
2016E
2017E
2018E
2019E
2020E
0.0
0.1
1.9
0.1
1.1
6.8
Debt to Banks within 12 months (-)
-0.2
0.0
-0.7
-0.8
-1.0
-2.5
Current Net Financial Position
-0.1
0.1
1.2
-0.7
0.1
4.3
0.0
0.0
0.0
0.0
0.0
0.0
Debt to Banks over 12 months (-)
-0.5
-0.48
-0.32
-0.66
-1.00
-0.50
Debt to Parent Co. / Other Sh.holders (-)
-0.2
-2.0
-3.8
-3.8
-3.8
-2.3
0.0
0.0
0.0
0.0
0.0
0.0
Non-Current Financial Position
-0.7
-2.5
-4.1
-4.5
-4.8
-2.8
Net Fin. Position [Net debt (-) / Cash (+)]
-0.9
-2.4
-2.9
-5.2
-4.7
1.5
Cash and deposits (+)
Long term financial credits (+)
Bonds (-)
Source: Value Track Analysis
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38
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28 February 2017
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Marco Greco
VALUETRACK
Worst-case scenario
We run a sensitivity analysis to come up with a worst-case scenario in case Energica actually misses
our estimated volume targets.
Thus we propose a funding gap analysis assuming Energica to miss its 2017 volume target, delivered
instead either in 2018 or 2019.
A one-year delay with respect to budget could lead Energica to generate an aggregate ca. €20mn loss
in Gross Margin, thus giving up approximately €15mn in OpFCF after working capital adjustment.
Assuming a cost cutting contingency plan of ca. 30% then we should get to a final Post Contingency
Plan “gap” of ca. €7mn.
Getting further distant from targets should lead to a larger funding gap. If 2017 targets are met in
2019, Energica could give up almost €30mn in cumulated Gross Profit or ca. €20mn in OpFCF once
working capital cash generation has been considered.
In this case we imagine Energica to get deeper on cost cutting, thus assuming a 50% contingency plan
to halve its cost structure. Using this extreme hypothesis, we come up with Energica lacking nearly
€10mn cumulative OpFCF.
Energica: Worst Case scenarios
One year delay
Two years delay
Source: Energica
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39
ENERGICA
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Marco Greco
VALUETRACK
EMC: Income Statement
(€mn)
2015
2016E
2017E
2018E
2019E
2020E
Revenues from Sales
0.2
1.3
10.6
24.5
60.8
108.0
Other Revenues
0.3
1.2
0.8
0.8
0.8
0.8
Total Group Revenues
0.6
2.5
11.4
25.3
61.6
108.8
Cost of sales
-0.9
-3.4
-11.5
-23.6
-52.9
-90.0
Labour costs
-0.6
-1.5
-2.0
-2.3
-3.0
-4.1
EBITDA
-0.9
-2.5
-2.1
-0.6
5.7
14.6
nm
nm
nm
nm
9.3%
13.5%
Depreciation & Amortization
-0.5
-1.7
-2.2
-2.7
-3.5
-3.6
EBIT
-1.5
-4.1
-4.3
-3.3
2.2
11.0
0.0
0.1
-0.1
-0.2
-0.2
-0.2
-1.5
-4.1
-4.3
-3.5
2.0
10.8
0.2
0.2
0.2
0.2
-0.1
-1.1
-1.3
-3.9
-4.1
-3.3
1.9
9.8
2015
2016E
2017E
2018E
2019E
2020E
Total Capital Employed
4.1
7.1
6.5
5.5
6.9
10.5
Group Net Equity (*)
3.3
4.7
3.6
0.3
2.2
12.0
Net Fin. Position (*)
-0.9
-2.4
-2.9
-5.2
-4.7
1.5
2015
2016E
2017E
2018E
2019E
2020E
-0.9
-2.5
-2.1
-0.6
5.7
14.6
0.0
-0.9
0.9
0.6
-2.6
-4.6
-0.8
-3.7
-2.5
-2.5
-2.6
-2.8
0.8
0.0
0.0
0.2
0.2
0.2
OpFCF b.t.
-0.8
-7.1
-3.7
-2.3
0.8
7.5
Cash Taxes
0.2
0.2
0.2
0.2
-0.1
-1.1
OpFCF a.t.
-0.6
-6.9
-3.5
-2.1
0.7
6.4
Capital Injections
0.8
5.3
3.0
0.0
0.0
0.0
Net Financial Charges
0.0
0.1
-0.1
-0.2
-0.2
-0.2
Net Cash generated
0.2
-1.5
-0.5
-2.3
0.5
6.2
EBITDA margin (%)
Net Fin.Income (charges)
Pre-tax Profit
Tax
Net Profit
Source: Energica, Value Track Analysis
EMC: Balance Sheet
(€mn)
Source: Energica, Value Track Analysis
(*) Assuming a €3mn capital injection in 2017FY
EMC: Cash Flow Statement
(€mn)
EBITDA
Working Capital Needs
Capex
Change in Provisions
Source: Energica, Value Track Analysis
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40
ENERGICA
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Initiation of Coverage
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28 February 2017
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Marco Greco
VALUETRACK
Appendix: Top Management structure
Manager
Description
Franco Cevolini
Franco Cevolini was born in 1972 in Modena. He graduated in Materials Engineering at the
Chairman of the Board of Directors
University of Modena in 1997. He held the position of Executive Director in 1996 at the newly
founded CRP Technology S.r.l. (spin-off from Roberto Cevolini & Company). He is also member
of the Board of Directors of CRP Group.
Livia Cevolini
Livia Cevolini was born in 1978 in Scandiano (RE). She graduated in Mechanical Engineering in
Chief Executive Officer
2003 at the University of Parma and then she became part of the CRP Group. From 2002 to
2009, she was Marketing and Sales Director at the Group CRP. In 2009 she became the
responsible of the Energica project in the Group CRP and since 2014 the CEO of Energica
Motor Company, when the company was founded.
Andrea Vezzani
Andrea Vezzani was born in 1966 in Modena. In 1991, he graduated in Economics at the
Chief Financial Officer
University of Modena. Since its foundation, Andrea Vezzani is the CFO of Energica Motor
Company S.p.A. Previously he has held various positions in management control depts. From
1996 to 2000, he was financial controller at McDonald's Development Italy Inc. and from 2001
to 2006, he was financial controller at Think3 Inc.
Giampiero Testoni
Giampiero Testoni was born in 1978 in Milan. He graduated in 1996. In 2006, he started working
Chief Technology Officer
at CRP Technology S.r.l. and became Racing Department Manager. Since 2010 he started
working in the department of R&D for the Energica project and contributed in the creation of
numerous registered patents for Energica.
Source: Energica
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41
ENERGICA
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Initiation of Coverage
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28 February 2017
|
Marco Greco
VALUETRACK
Appendix - Deal with Atlas Capital Markets
Recently (February 15, 2017), Energica has signed an investment agreement with Atlas Special
Opportunities (Atlas) and Atlas Capital Markets (ACM), which provides for:
!
The facultative issuance of a convertible bond for a maximum principal amount of €4mn;
!
The issue of ten (10) stock warrants in favour of Atlas, for the subscription of a maximum
stock value of €1.2mn. Such an issue would take place only after the issuance of bonds.
It has to be remembered, that Energica already has 1,128,250 outstanding warrants, issued during the
IPO and granting the right to subscribe 1 share per warrant.
We note that the company would have to pay €215,000 upfront one-off fee (~5% of the deal value) in
case it decides to trigger the deal asking for the issuance of the first tranche of the bond. Until that
moment, this deal is just a free option to enter the agreement in case of necessity.
As stated by the company, the agreement has the following objectives:
!
Securing new financial resources to sustain and increase the business expansion of the
company;
!
Obtaining greater financial flexibility, even in the short period;
!
Reinforcing the financial structure in the medium-long term;
!
Enlarging the shareholders base in case of conversion of the instruments.
Atlas Convertible Bond(s)
The security is made by 400 convertible bonds with a nominal value of €10,000 each, for a total of
€4.0mn, and can be issued in nine (9) tranches, facultative on the necessities of the firm. These are
structured as follows:
!
80 bonds (worth €800,000) in the first tranche, with the contemporary distribution of
warrants (see below);
!
40 bonds for each other tranche (worth €400,000 each), up to a maximum of eight (8).
Furthermore, Atlas has the possibility to ask to subscribe each tranche for a value of €800,000
instead of the predetermined one, provided that the total amount of the loan is not exceeded.
The bonds carry a nominal annual coupon of 1%, have to be issued within 30 months from deal
signature and, when issued, can be converted in ordinary shares at any time within 5 years (or
automatically converted at this date).
The conversion ratio is based on a conversion price equal to the 90% of the volume-weighted average
price (VWAP) registered on the 20 days before the request. As an example, taking into consideration a
VWAP standing at ca. €3.0, if Atlas asks to convert 1 bond (worth € 10,000), the conversion price
would be € ~2.7, and the corresponding shares issued would be 3,704 worth ca. €11.112.
Atlas Convertible Bond Details
Number of bonds
400
Coupon (annual)
1%
Value of each bond (€)
10,000
Emission period (months)
30
Number of tranches
9
Conversion period (years)
5
Bonds first tranche
80
Conversion price
90% VWAP 20
Bonds tranches 2-9
40
Conversion ratio
Value/conv.price
Total value (€)
4,000,000
Upfront fees (€)
215,000
Source: Company data, Value Track analysis
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42
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28 February 2017
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Marco Greco
VALUETRACK
Atlas Warrants
The deal considers also the allocation of 10 warrants to Atlas. Each warrant can be exercised at any
time in 5 years, and grants the right to subscribe 28,169 ordinary shares at a price of €4.26, ca 40%
higher than current market price. As an effect, the maximum cash in for Energica would total €1.2mn
and would imply the issuance of 281.690 shares, representing a maximum 2.36% dilution for
remaining shareholders.
As previously stated, the issuance of these warrants will be triggered by the request for the first
tranche of the convertible bond.
Warrants Details
Quantity
Exercise period (years)
Conversion ratio (1w:x shares)
10 Subscribed shares (max)
281,690
5 Subscription price (€)
4.26
28,169 Maximum total value (€)
1,200,000
Source: Company data, Value Track analysis
Dilution Scenarios
If activated, the transaction will probably have a dilution effect on the existing shareholders of
Energica. Nevertheless, this dilution is variable and cannot be projected exactly, as it depends on
many unpredictable variables like the amount of tranches issued, the stock price movements, Atlas’
willingness to convert the instruments and so on.
Whereas these considerations hold true, the deal may lead to a significant dilution under certain
conditions, as there is no presence of stop-loss mechanisms. For completeness of information, we
provide here an analysis of the dilution effect stemming from three different scenarios, assuming a
worst-case perspective of maximum conversions.
Dilution from Atlas instruments conversion: Scenario analysis
Converted bonds
Converted warrants (Atlas deal)
Current outstanding shares
VWAP 20 days (€)
New shares from bonds
New shares from warrants (Atlas deal)
Total new shares (Atlas deal)
Total Outstanding shares
Dilution (%)
400
10
11,656,500
2.00
3.00
4.00
2,222,222
1,481,481
1,111,111
281,690
281,690
281,690
2,503,912
1,763,171
1,392,801
14,160,412
13,419,671
13,049,301
17.68%
13.14%
10.67%
Source: Value Track Analysis
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43
ENERGICA
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Marco Greco
VALUETRACK
On top of that, we remind the presence of IPO warrants not yet converted. Assuming their complete
conversion, we compute the following additional dilution per scenario.
Dilution from IPO warrants conversion: Scenario analysis
IPO warrants
1,128,250
New shares from warrants (IPO)
1,128,250
Outstanding shares after Atlas deal conversions
14,160,412
13,419,671
13,049,301
Final outstanding shares
15,288,662
14,547,921
14,177,551
7.38%
7.76%
7.96%
Additional dilution (%)
Source: Value Track Analysis
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44
ENERGICA
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Initiation of Coverage
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28 February 2017
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Marco Greco
VALUETRACK
Appendix – Clean Power IndexSM by Kensho
Components of the Kensho Clean Power IndexSM
EV/Revenues
Ticker
Company Name
ABB
ABY
EV/EBITDA
P/E
FY17
FY18
FY17
FY18
FY17
FY18
Abb Ltd
1.5
1.5
10.4
9.4
20.4
17.4
Abengoa Yield Plc
8.2
7.8
10.4
9.8
nm
nm
ALE
Allete
3.7
3.5
11.2
11.1
nm
nm
AMAT
Applied Materials
2.8
2.6
10.3
9.3
15.0
13.7
ATNI
Atlantic Tele-Network
2.4
2.2
7.2
6.0
37.0
31.9
AUO
Au Optronics Corp
0.5
0.5
2.4
2.8
5.1
9.4
BEP
Brookfield Renewable Power Fund
4.9
5.2
8.5
8.6
nm
nm
CSIQ
Canadian Solar Inc.
1.0
1.1
10.1
10.9
10.2
8.5
DQ
Daqo New Energy
2.1
1.3
4.8
3.1
6.0
5.0
EE
El Paso Electric Company
3.5
3.4
12.1
11.0
20.2
19.1
EMR
Emerson Electric Company
2.8
2.6
12.8
11.9
25.2
22.2
ES
EverSource Energy
3.6
3.6
10.6
10.4
18.2
17.4
EXC
Exelon Corp.
2.2
2.2
8.2
7.7
13.5
12.4
FSLR
First Solar
0.8
0.9
8.8
6.3
nm
nm
JASO
Ja Solar Holdings Co.
0.5
0.6
5.1
7.7
nm
nm
JKS
Jinkosolar Holding Company Limited
0.7
0.7
5.2
6.4
3.9
6.6
MIC
Macquarie Infrastructure Company Trust
5.5
5.2
12.4
11.8
25.8
23.0
NEP
NEXTERA ENERGY PARTNERS
6.1
5.4
7.4
6.7
17.1
13.9
NRG
Nrg Energy
1.6
1.5
6.6
7.6
nm
nm
NYLD
NRG Yield
8.0
7.5
9.4
9.3
19.3
18.6
ORA
Ormat Technologies
11.2
10.5
11.2
10.5
31.4
26.2
ORBK
Orbotech Ltd
1.5
1.2
6.9
5.6
14.6
12.9
PEGI
Pattern Energy Group Inc.
8.8
7.3
11.2
9.8
nm
nm
nm
RUN
Sunrun Inc
2.8
2.4
na
na
SEDG
SOLAREDGE TECHNOLOGIES
0.9
0.7
5.6
4.5
13.5
12.6
SPWR
Sunpower Corp.
1.1
1.0
22.8
8.5
nm
nm
TERP
Terraform Power Inc Class A
7.1
6.5
9.5
8.8
nm
nm
TRN
Trinity Industries
1.5
1.6
7.0
7.2
23.2
26.3
TSL
Trina Solar Limited
0.7
0.9
5.7
8.9
nm
nm
TSLA
Tesla Motors
4.6
2.9
43.9
27.3
nm
nm
VMI
Valmont Industries
1.5
1.4
10.5
9.6
22.9
20.6
2.4
2.2
9.5
8.9
17.7
17.4
Median
nm
nm
Source: Kensho Technologies
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45
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Marco Greco
VALUETRACK
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VALUETRACK
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47
VALUETRACK
DISCLAIMER
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PROMOTION ORDER”), (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) (“HIGH NET WORTH COMPANIES,
UNINCORPORATED ASSOCIATIONS ETC.”) OF THE FINANCIAL PROMOTION ORDER, (III) ARE OUTSIDE THE UNITED KINGDOM, OR
(IV) ARE PERSONS TO WHOM AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF
SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000) IN CONNECTION WITH THE ISSUE OR SALE OF ANY SECURITIES
MAY OTHERWISE LAWFULLY BE COMMUNICATED OR CAUSED TO BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING
REFERRED TO AS “RELEVANT PERSONS”). THIS DOCUMENT IS DIRECTED ONLY AT RELEVANT PERSONS AND MUST NOT BE ACTED
ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS
DOCUMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. IN
ITALY THIS DOCUMENT IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED AT QUALIFIED INVESTORS WITHIN THE MEANING OF
ARTICLE 100 OF LEGISLATIVE DECREE NO. 58 OF 24 FEBRUARY 1998, AS AMENDED, AND ARTICLE 34-TER, PARAGRAPH 1, LETTER B),
OF CONSOB REGULATION ON ISSUERS NO. 11971 OF MAY 14, 1999, AS SUBSEQUENTLY AMENDED (THE “ISSUERS’ REGULATION”)
PROVIDED THAT SUCH QUALIFIED INVESTORS WILL ACT IN THEIR CAPACITY AND NOT AS DEPOSITARIES OR NOMINEES FOR OTHER
SHAREHOLDERS, SUCH AS PERSONS AUTHORISED AND REGULATED TO OPERATE IN FINANCIAL MARKETS, BOTH ITALIAN AND
FOREIGN, I.E.: A) BANKS; B) INVESTMENT FIRMS; C) OTHER AUTHORISED AND REGULATED FINANCIAL INSTITUTIONS; D)
INSURANCE COMPANIES; E) COLLECTIVE INVESTMENT UNDERTAKINGS AND MANAGEMENT COMPANIES FOR SUCH
UNDERTAKINGS; F) PENSION FUNDS AND MANAGEMENT COMPANIES FOR SUCH FUNDS; G) DEALERS ACTING ON THEIR OWN
ACCOUNT ON COMMODITIES AND COMMODITY-BASED DERIVATIVES; H) PERSONS DEALING EXCLUSIVELY ON THEIR OWN ACCOUNT
ON FINANCIAL INSTRUMENTS MARKETS WITH INDIRECT MEMBERSHIP OF CLEARING AND SETTLEMENT SERVICES AND THE LOCAL
COMPENSATORY AND GUARANTEE SYSTEM; I) OTHER INSTITUTIONAL INVESTORS; L) STOCKBROKERS; (2) LARGE COMPANIES
WHICH AT INDIVIDUAL COMPANY LEVEL MEET AT LEAST TWO OF THE FOLLOWING REQUIREMENTS: — BALANCE SHEET TOTAL:
20,000,000 EURO, — NET REVENUES: 40,000,000 EURO, — OWN FUNDS: 2,000,000 EURO; (3) INSTITUTIONAL INVESTORS WHOSE
MAIN ACTIVITY IS INVESTMENT IN FINANCIAL INSTRUMENTS, INCLUDING COMPANIES DEDICATED TO THE SECURITISATION OF
ASSETS AND OTHER FINANCIAL TRANSACTIONS (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”).
ANY PERSON WHO IS NOT A RELEVANT PERSON SHOULD NOT ACT OR RELY ON THIS DOCUMENT OR ANY OF ITS CONTENTS. THIS
DOCUMENT IS NOT ADDRESSED TO ANY MEMBER OF THE GENERAL PUBLIC IN ITALY. UNDER NO CIRCUMSTANCES SHOULD THIS
DOCUMENT CIRCULATE AMONG, OR BE DISTRIBUTED IN ITALY TO (I) A MEMBER OF THE GENERAL PUBLIC, (II) INDIVIDUALS OR
ENTITIES FALLING OUTSIDE THE DEFINITION OF “QUALIFIED INVESTORS” AS SPECIFIED ABOVE OR (III) DISTRIBUTION CHANNELS
THROUGH WHICH INFORMATION IS OR IS LIKELY TO BECOME AVAILABLE TO A LARGE NUMBER OF PERSONS. THIS DOCUMENT IS
BEING DISTRIBUTED TO AND IS DIRECTED ONLY AT PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (“EEA”)
WHO ARE “QUALIFIED INVESTORS” WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE (DIRECTIVE
2003/71/EC), (“QUALIFIED INVESTORS”). ANY PERSON IN THE EEA WHO RECEIVES THIS DOCUMENT WILL BE DEEMED TO HAVE
REPRESENTED AND AGREED THAT IT IS A QUALIFIED INVESTOR. ANY SUCH RECIPIENT WILL ALSO BE DEEMED TO HAVE
REPRESENTED AND AGREED THAT IT HAS NOT RECEIVED THIS DOCUMENT ON BEHALF OF PERSONS IN THE EEA OTHER THAN
QUALIFIED INVESTORS OR PERSONS IN THE UK, ITALY AND OTHER MEMBER STATES (WHERE EQUIVALENT LEGISLATION EXISTS)
FOR WHOM THE INVESTOR HAS AUTHORITY TO MAKE DECISIONS ON A WHOLLY DISCRETIONARY BASIS. THE COMPANY, VALUE
TRACK S.R.L. AND THEIR AFFILIATES, AND OTHERS WILL RELY UPON THE TRUTH AND ACCURACY OF THE FOREGOING
REPRESENTATIONS AND AGREEMENTS. ANY PERSON IN THE EEA WHO IS NOT A QUALIFIED INVESTOR SHOULD NOT ACT OR RELY
ON THIS DOCUMENT OR ANY OF ITS CONTENTS. THE EXPRESSION “PROSPECTUS DIRECTIVE” MEANS DIRECTIVE 2003/71/EC (AND
AMENDMENTS THERETO, INCLUDING THE 2010 PD AMENDING DIRECTIVE, TO THE EXTENT IMPLEMENTED IN THE RELEVANT
MEMBER STATE), AND INCLUDES ANY RELEVANT IMPLEMENTING MEASURE IN THE RELEVANT MEMBER STATE AND THE
EXPRESSION “2010 PD AMENDING DIRECTIVE” MEANS DIRECTIVE 2010/73/EU. ENERGICA MOTOR COMPANY SPA (THE
“COMPANY”) IS A RESEARCH CLIENT OF VALUE TRACK S.R.L. HOWEVER ANY FORECASTS, OPINIONS AND EXPECTATIONS
CONTAINED HEREIN ARE ENTIRELY THOSE OF VALUE TRACK S.R.L. AND ARE GIVEN AS PART OF ITS NORMAL RESEARCH ACTIVITY
AND SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORISED OR APPROVED BY ANY OTHER PERSON. VALUE TRACK S.R.L. HAS
NO AUTHORITY WHATSOEVER TO MAKE ANY REPRESENTATION OR WARRANTY ON BEHALF OF THE COMPANY, ITS SHAREHOLDERS,
ANY OF ITS ADVISORS, OR ANY OTHER PERSON IN CONNECTION THEREWITH. WHILE ALL REASONABLE CARE HAS BEEN TAKEN TO
ENSURE THAT THE FACTS STATED HEREIN ARE ACCURATE AND THAT THE FORECASTS, OPINIONS AND EXPECTATIONS CONTAINED
HEREIN ARE FAIR AND REASONABLE, VALUE TRACK S.R.L. HAS NOT VERIFIED THE CONTENTS HEREOF AND ACCORDINGLY NONE OF
VALUE TRACK S.R.L., THE COMPANY, ITS SHAREHOLDERS, ANY ADVISORS TO THE COMPANY OR ITS SHAREHOLDERS OR ANY OTHER
PERSON IN CONNECTION THEREWITH NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS OR EMPLOYEES, SHALL BE IN ANY
WAY RESPONSIBLE FOR THE CONTENTS HEREOF AND NO RELIANCE SHOULD BE PLACED ON THE ACCURACY, FAIRNESS, OR
COMPLETENESS OF THE INFORMATION CONTAINED IN THIS DOCUMENT. NO PERSON ACCEPTS ANY LIABILITY WHATSOEVER FOR
ANY LOSS HOWSOEVER ARISING FROM THE USE OF THIS DOCUMENT OR OF ITS CONTENTS OR OTHERWISE ARISING IN
CONNECTION THEREWITH. TO THE EXTENT PERMITTED BY LAW AND BY REGULATIONS, VALUE TRACK S.R.L. (OR ITS OFFICERS,
DIRECTORS OR EMPLOYEES) MAY HAVE A POSITION IN THE SECURITIES OF (OR OPTIONS, WARRANTS OR RIGHTS WITH RESPECT TO,
OR INTEREST IN THE SHARES OR OTHER SECURITIES OF) THE COMPANY AND MAY MAKE A MARKET OR ACT AS A PRINCIPAL IN ANY
TRANSACTIONS IN SUCH SECURITIES.
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