Vivopower | Burlap's Gambles

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Vivopower is a B corporation comprised of J.A. Martin Electrical and Kenshaw Electrical. Originally from Australia, they now also have operation in Europe and North America. They recently acquired Tembo e-LV, a company

converting conventional vehicle into EVs.

Current LOI and MSA for Tembo e-LV conversion kits

LOI with Toyota for 5 years(+2 in options) in Australia.
$120m with Access until 2026 in Canada.
$30m with Bodiz until 2026 in Mongolia.
$215m over 5 years with GHH group.

Tottenham Spurs partnership

"VivoPower might supply a large, solid state battery with capacity of more than 3 MW at the stadium to balance and guarantee the venue’s power supply, including rooftop solar panels, battery storage, custom microgrid controls and electrical infrastructure."

Analyst coverage

Price target of $19, by Edison Research (hired), June 22, 2021.
Price target of $5, by AGP, April 4, 2022.

Subsidiaries

More about Tembo E-LV.

"Using the Toyota 70-series & the Toyota Hilux as a base vehicle, the Tembo e-LV electric drivetrain replaces the engine, gearbox and all auxiliary parts. Instead of the engine you will find an electric motor and an inverter, instead of fuel lines and a diesel tank there are electric connectors and battery packs. The new drivetrain is a completely sealed and waterproof"

More about Kenshaw Electrical. (now Aevitas)

"We provide reliable specialist services in the areas of electric motors, generators and non-destructive testing (NDT). Our capabilities and experience include the design, manufacture, installation, commissioning, repair, testing and service (whether routine or emergency) of business critical power generation and electric motor products including a fully fitted workshop with skilled mechanical and electrical staff."

More about J.A. Martin Electrical. (now Aevitas)

"J.A. Martin serviced almost 250 customers in the fiscal year ended 30 June 2020 across a diverse range of industries, including solar farms, grain handling and agriculture, water and gas utilities, cotton gins, commercial buildings, mining, marine and rail infrastructure."

More about Caret.

Formerly Innovative Solar Systems, caret is the result of a litigious story, read here. They announced a possible spinoff of 206MW from their solar portfolio with a new entity, Caret Decimal. This company would be focusing on cryptocurrency mining.

Growth ESG drivers

When it comes to the electrification of the mining industry, there is a multitude of pilot projects going on in right now, as we can see at the newly founded annual Electric mine summit.
While there is competition, there are also lots of opportunities with more than 35,000 mines across the globe, and only one fully electrical, The Borden gold mine.

One can anticipate that one day every underground mines in the world will be 100% running with electric vehicles, simply because the ventilation savings make it cost-efficient. But even before the environment, and savings, comes the health of the workers. According to BDO, this push will come from the financiers of new mines and potentially from government bodies too, who may even choose to ban diesel machines from new underground mines because of the health issues. Diesel fumes are as toxic as mustard gas, asbestos and arsenic. One can speculate that Vivopower is a first mover and the TAM is in the billions.

Recent developments. (2022-04-09)

Group cash levels increased from $3.3m at 31 December 2021 to $4.6m as at 31 March 2022.
Quarterly unaudited revenues during Q3 FY22 were $10.2m, representing a 15% increase compared to $8.9m for the previous corresponding quarter
As previously announced, Tembo Netherlands is relocating to a larger and more modern facility in a substantially more business-friendly location in the Eindhoven Airport Precinct. This is expected to be completed by the end of May 2022.
During the past quarter, Tembo’s existing 4x4 upfitting business has won material new EU orders including with ICL and Boliden.
We continue to work with Toyota Motor Corporation Australia (“TMCA”), GB Auto, and Arctic Trucks. As and when there are updates in relation to the status of commercial discussions with each of these parties, we will announce as appropriate.
Winning of new contracts and completion of projects During the past quarter, the Aevitas businesses began or completed several major projects, including sale and delivery of 4 x 2,750kVA generators for a major data centre client, and completion of the 200 MW Bluegrass Solar Farm and 119 MW Hillston Solar Farm.
During the quarter, Executive Chairman and CEO, Kevin Chin committed to acquiring at least US$250,000 of VivoPower shares during open trading windows. (RSU?)

Burlap's 2 minutes DDs

Tembo e-LV is cumulating $500m+ in 6 deals (LOI) with worldwide distributors. Total orders should amount to 6000+ EV kits.
During the second half of the financial year, Tembo accelerated the development of its 72 kWh battery platform for the Landcruiser model in accordance with the highest automotive product development process standards, in close cooperation with GB Auto and Toyota Motor Corporation Australia Limited. In recent months, Tembo’s team of engineers have collectively developed an enhanced product, which is undergoing extensive testing and at the same time as the first customer prototype vehicles for this enhanced product are being assembled in Australia.
Small float, 20 millions outstanding shares with 50% of insider ownership. Arowana holdings which is led by the same CEO owns over 7 m shares as of August 2021.
Analyst price target of $19 based on a DCF model with assumptions of 5,000 EVs in 2025 (every change of 1,000 vehicles has an impact of c $5 a share on their valuation).
Complementarity between their three subsidiaries, offering turn-key solutions for decarbonization of manufacturing and industrial processes (all-in-one, solar, batteries and EVs).
Very strong tailwind from a macroeconomic perspective, especially for battery metals mining operations that will have to offer a sustainable product to EV manufacturers.

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Never been profitable since inception.
High risks of failing execution on the EV segment.
Cost of goods is high. Currently, gross profit is at 16%, based upon Vivopower’s management estimates, the Company believes that, once prototype and test production is complete and full scale series production commences, it could achieve gross margins of between 25% and 33% under the Distribution Agreements.
Competition is starting to get tougher, what once was the hedge of Tembo products is now becoming mainstream. With Ford announcing an all-electric F-150 and many others, the pickup segment should get even more players in the next 2-3 years.
Shareholders on social media platforms will agree with the affirmation that holding VVPR is a frustrating effort.
The US solar portfolio have seen major drawbacks, with over 600MWdc cancelled or stalled.
Cost and scarcity of raw materials for battery and solar arrays systems might be detrimental to the cost of goods.
A growing list of costs and expenses could mean greater dilution as the Company try to ramp up Tembo's production and different SES verticals are developed. As of 30 June 2020, there were 13,557,376 ordinary shares in issue now to 20,641,995 ordinary shares issued and outstanding on August 18, 2021.

Toyota LOI to become a MSA.

Tembo e-LV has a Letter of intent with Toyota Australia. In this clip they announce that we could see a Master Service Agreement in 60 days starting June 24th, click here to add to your agenda