Home » Reports » Zeus Capital: » Ceres Power Excellent progress during FY2018
Ceres Power Holdings Plc

Ceres Power Excellent progress during FY2018

Ceres Power (LON:CWR)’ FY2018 results confirm a year of demonstrable strategic headway. The Company has made excellent commercial strides, establishing partnerships with Weichai Power and Bosch, alongside progressing with four existing major OEMs. Revenue and other income for the year grew by 71% to £7m, while Ceres’ contracted order book has grown materially from £3m to £30m. Post year end, the balance sheet has been significantly strengthened via a c.£20m institutional fund raise and a combined £29m of investments from Bosch and Weichai. A continued focus on technical improvement has seen the release of Ceres’ new V5 technology, while its 5kW stack development is well underway, alongside other multi-kW systems. The Board has expressed strong long-term confidence, and the focus remains on securing licence agreements for SteelCell® with Ceres’ six OEM clients within its key target sectors of automotive, data centres and commercial CHP applications. The shorter-term priority is completing the joint venture and licencing agreement with Weichai that will trigger its second equity investment.

Excellent commercial momentum – Ceres is now engaged with six OEM partners at the development stage: Bosch (named on 21 August), Nissan, Cummins, Honda, Weichai, and an unnamed OEM. The relationship with Weichai, announced in May, has been a very exciting addition (details on page 3), and has provided a new opportunity within China’s significant electric powered bus market.

Technical developments – Ceres delivered a number of improvements for its SteelCell® product throughout the year. Its newer V5 technology has now been released to customers that shows lower degradation rates and efficiencies equal to the best performing in the Solid Oxide Fuel Cell (‘SOFC’) industry. The Company is also advancing with its new 5kW stack for a range of higher power applications, and is developing a 30kW range extender for electric buses in China.

Financial strength, forecasts unchanged – We leave our forecasts unchanged today, following our recent changes (on 21 August). We believe our revenue expectations carry a high degree of confidence, underpinned by a substantially increased revenue pipeline. The Company has greatly strengthened its balance sheet over the past six months via three equity investments and we forecast c.£66m net cash at June 2019, inclusive of Weichai’s second c.£28m investment.

Outlook positive – Since June, there has been further positive updates. Ceres Power recently announced a new partnership agreement with Nissan to develop fuel cells for electric vehicle applications through UK government funding from the Advanced Propulsion Centre, as well as the of naming Bosch as its OEM client, with which it is targeting many multi-kW applications. Investment in Ceres’ new manufacturing facility will support development and initial volume demand from customers