Arrowhead published an Equity Research Report on 5N Plus
December 21, 2023

5N Plus (TSX: VNP) Research Report

Arrowhead is updating its coverage on 5N Plus Inc. (“5N Plus”, “VNP”, or “the company”) with a fair value of CAD 4.4 per share in the low-bracket scenario and CAD 5.2 per share in the high-bracket scenario (share price on December 21, 2023: CAD 3.60), using the Discounted Cash Flow (DCF) methodology.

VNP’s wholly owned subsidiary, AZUR SPACE Solar Power GmbH (AZUR), supplied triple junction solar cells to RayGen, an Australian solar and storage company, for its flagship power plant in Carwarp, Victoria (Australia). AZUR’s high-efficiency solar cells served as a key component for RayGen’s proprietary solar technology, enabling RayGen to provide energy on a large scale with minimal environmental impact.
5N Plus’ revenue came in at USD 62.9 mn in Q3 2023 as compared with USD 66.4 mn in Q3 2022, a decline of c. 5.1% on a Year-on-Year (YoY) basis. Adjusted EBITDA stood at USD 9.6 mn, showing a 5.5% YoY increase YoY, with adjusted EBITDA margin increasing to 15.3% from 13.7% in Q3 2022. It reported a net profit of USD 1.5 mn during the quarter, compared with a net loss of USD 7 mn YoY. The net debt stood at USD 78.6 mn at the end of Q3 2023, compared with USD 78.3 mn at the end of FY 2022.
Specialty Semiconductors’ revenue stood at USD 41.8 mn in Q3 2023, compared with 32.0 mn in Q3 2022, an increase of 30.6% YoY. This increase was driven by higher demand in strategic sectors such as space solar power and terrestrial renewable energy. Adjusted EBITDA for the quarter decreased to USD 4.7 mn in Q3 2023 due to the shift in AZUR’s revenue contribution from Q3 to Q4.
Performance Materials segment generated revenue of USD 21.2 mn, as compared with USD 34.4 mn in Q3 2022, due to the company’s strategic exit from the manufacturing of low-margin extractive and catalytic products in H2 2022 and divestiture of its Tilly, Belgium operations in Q4 2022. Adjusted EBITDA stood at USD 6.6 mn in Q3 2023, a 30% increase on a YoY basis, with adjusted EBITDA margin at 31% for the quarter as compared with 15% in Q3 2022.
Revenue from the Americas stood at USD 30.8 mn in Q3 2023, of which USD 28.8 mn was contributed by the US operations. Revenue from Europe was at USD 23.4 mn, compared with USD 26.6 mn in Q3 2022, with Germany being the highest contributor with revenue at USD 14.7 mn for the quarter.