DG Innovate (DGI) is an advanced research and development company focusing on sustainable & environmentally considerate improvements to electric mobility and energy storage solutions. Working with a range of partners, including major transport & energy companies, research bodies & the UK government, DGI is moving towards commercialisation, developing products with applications across a range of end uses.
Technology acceleration programme ongoing under new CEO
DGI listed on the Official List of the LSE on 8th April 2022 raising a total of £4.63 million. The proceeds are being used to fund an acceleration programme to advance commercial progress in the short to medium-term. In May, DGI announced Peter Tierney as its new CEO, an experienced executive with over 30 years' experience in operating and developing growth orientated service and manufacturing businesses.
October commercial update sets out roadmap towards volume production
In the drive technology business, DGI’s advanced prototype 250kW/400kW edrives are planned to be taken from advanced prototype stage to final product release & volume manufacturing over the next three years. After the final design prototype stage, a phase of pilot manufacturing and industrial engineering will take place, with the pilot facility expected to have a capacity of c.2,500 units per annum when completed early in 2024. Following this there will be a period of industrial engineering, a commercial scale design finalised, with a target of full commercial sales in volume by Q1 2025 from a new 10,000 unit per annum manufacturing facility. On the commercial side, DGI continues to explore a number of potential routes to market and progress discussions with its existing partners and other potential launch customers.
Licensing model being targeted for battery materials business
In battery materials, the initial formulation and testing of a hard carbon anode material from a sustainable bio waste product has advanced to the point of benchmark testing, with initial results said to be “good”. Partners are being given small sample batches of material for further testing. A planned scale up of material production will involve an iteration of process engineering to maintain the desired performance and material characteristics in high volume, followed by integrating the material into commercial scale battery cell production. The commercial plan here is to mainly pursue a licensing model via licensing to sodium-ion battery manufacturers. DGI expects that moving from pilot manufacturing to “giga-scale” manufacturing will take around 42 months.
Valuation suggests significant upside as the business is de-risked
Our DCF model, based on revenues from the EDT business segment, suggests a value of £45 million and price per share of 0.446p, with significant upside as the business is de-risked. We update coverage with a stance of Conviction Buy.
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For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.
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