Clean Industry Solutions: Positive trend but delayed signing of major contract

Steps forward in both business and R&D area
Operating income is up 87% to MSEK 12 during the first half of 2023. The trend regarding leads and order intake continues to be strongest in the subsidiary Industrial Solar, where interest continues to be very strong in both photovoltaic (PV) and the traditional industrial solar heat business. Recent interesting orders are MSEK 6 PV order to the German manufacturer Wössner and MSEK 5 with Unilever in Mexico as the end customer. The latter will be the first commercially installed Fresnel Collector in Latin America to produce steam for industrial processes. Interest is now also increasing in the USA.

Progress can also be noted in the largely publicly funded R&D area. Industrial Solar was awarded a grant agreement for a project highlighting the development and pilot demonstration of heat upgrade technologies. SolarSpring continues working intensively on the ROKKA project focused on ammonia recovery from wastewater and conversion to fertilizer with SolarSpring membrane modules.

The signing of the MSEK 55 order expected in Q4
Industrial Solar is scaling up its partnership strategy, which has the potential to support the ongoing steady growth in a cost-efficient way. Workshops with partners from different parts of the world and a new website lead to better capacity in sales as well as installations. Partners that invest time and money are a good indicator of future business.

With KEBE, Industrial Solar has a letter of commitment with an order value of around MSEK 55. In October 2022, it was announced that the plan was to sign the final contract during Q1 2023, but now it is estimated to be in Q4 2023. The customer’s ambition to optimize the funding of this big investment is the reason for the delay.

Cash flow & Financial situation
Cash flow was MSEK -4.3 in Q1 and -5,0 in Q2. Together, this is MSEK 1.5 better than last year. Cash position is MSEK 2.3 with potential addition of 3.0 from a not yet used loan arrangement. The recently announced rights issue results in a 71% dilution and will give MSEK 21.2 after costs upon full subscription. Analysguiden makes the assumption that this will be the case. The subscription price is SEK 0.40 per new share.

The fair value in the DCF analysis is reduced to 0,60 SEK (2.00). The major reason for the adjustment is the large dilution and an increase of the discount rate from 15% to 17% following higher general interest rates and also higher risk related to delay in order intake of larger projects such as KEBE.

If CISH starts to land a few of the potential ongoing large deals, this would be the long awaited big step for the Group.