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Analysis Clean Industry Solutions: Increasing operating income and large commercial order

Detta är en betald analys på uppdrag av Clean Industry Solutions utförd av Analysguiden

Operating income increases 69 percent
Clean Industry Solutions reports 0.3 million SEK (0.5) in net sales for the second quarter. Although net sales have decreased on a yearly basis, the total operating income for the quarter stands at 1.9 million SEK (1.2). This is attributed to large amounts of funding coming in from several ongoing R&D projects that the company is participating in. Total operating costs for the quarter is 5.8 million SEK (4.5), an increase of 29 percent on a yearly basis and 8 percent from the first quarter. The increasing costs are attributed partly to increased personnel cost needed to finish ongoing R&D projects as well as costs associated with the list change for Nasdaq First North. The company reports an operating result of -3.9 million SEK (-3.4) for the quarter.

First large commercial order to SolarSpring
Just a few days after the publication of the Q2 report, Clean Industry Solutions announced that SolarSpring had received a substantial order from the German non-profit organization atmosfair. The order is for the company’s water purification system PRO 3000 and has an initial value of 48200 euros. In addition to this, the company announced that atmosfair
has signalled a will to increase the order volume to a total of 10 water purification systems per year the coming 5 years. This increases the total lifetime value of the order to around 2.41 million euros by 2026. The order is a clear indication that investments are coming back to the sector and that the company has an attractive solution to combat CO2 emissions. Following a year of modest net sales due to the pandemics impact, this order affirms the acquisition of SolarSpring as a value-adder to the group.

Momentum increasing on several fronts
The quarter has also resulted in several exciting events for the company. The previously announced list change to Nasdaq First North is now finished and Clean Industry Solutions trades on the new exchange since the 12th of July. This was done in order to increase the availability of the company’s shares to outside investors as well as increase liquidity and visibility. In addition to this, the quarter has resulted in a new CFO, Jochen Lachnit, as well as the election of Finn Johnsson as the new chairman. The overall momentum of the market is increasing as the pandemic recedes as well as due to the urgency of drastic climate action, which has been emphasized by the publication of the latest IPCC report. This momentum is visible in the report as the company, apart from the order above, has received a number of smaller orders in addition several new R&D projects providing valuable funding.

Exciting times ahead
The second quarter is stable for the company and although net sales haven’t increased, several steps have been taken to facilitate an exciting growth journey ahead. In this stage, we hope the order received after the period constitutes the start of increasing commercial activity for the group. Triggers looking forward will be further commercial orders and increasing order values, which will both serve as references as well as prove the commercial viability in the offering. Apart from this, we will be paying close attention to how costs develop with increased commercial activity, lingering pandemic impacts as well as funding volume coming in from projects.

Our update results in minor changes to our estimates but a lowered safety margin, to reflect the increasing traction of the past period. This results in a motivated value the coming 12-18 months of 7.6-8.8 SEK (5.9-7.1). We look forward to following the development within the group in the coming months and hope to see a half-year characterized by increased commercial activity.

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