FREYR Battery: The Beaten-Down X-SPAC Restructures And Turns To Solar

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FREYR Battery is transforming into a vertically integrated solar module/cell and battery energy storage systems leader through the acquisition of Trina Solar's US assets.The acquisition reshapes FREY ...

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(NYSE:FREY) is a pre-production semi-solid state tech battery company. Or at least it was. On 11/06/2024 the company announced major changes and strategic restructuring that will transform the company as a vertically integrated solar module producer and battery and energy storage company through an agreement to purchase Trina Solar's American assets. The company was climbing a steep hill in the last months due to difficulties executing its initial plan while burning cash. The latest developments provided the glimpse of light the company needed, and FREYR is now expected to have revenue flowing effective immediately. The expected revenue and EBITDA forecasts for 2025 constitute FREYR is undervalued, something noticed by the market, making FREYR's stock skyrocket for 2 days after the announcement. The new strategic plan is a positive development for FREYR pointing out that the worst could be back, however, a cautious approach regarding execution and funding is needed. FREYR 11/2024 Investor Presentation Company Overview The Road So Far FREYR AS completed a business combination with the SPAC Alussa Energy Acquisition Corp. which resulted in ~$704M gross proceeds, with strategic, established institutional investors participating, and commenced trading on NYSE on 07/08/2021. The company was supposed to develop up to 43 GWh of semi-solid lithium battery cell production capacity in the Giga Arctic facility in the Mo i Rana industrial complex in Northern Norway by 2025 using low-cost renewable energy and become one of Europe's largest battery cell suppliers. There were also announced plans for a Giga America Facility and later for the Giga Vaasa Facility in Finland. However, execution issues came up. The company presented delays in its Customer Qualification Plant operations and the Giga Arctic development paused due to lack of funding, causing analysts to publish downgrade announcements. The company then prioritised the functioning of the CQP and the Giga America facility and made structural and leadership changes. Despite the bumpy road, FREYR presented important partnerships and EU grants while progressing in its CQP. The company also redomiciled from Luxembourg to the US effective 12/31/2023 and is now based in Newnan, Georgia. Through redomiciling FREYR is expected to benefit from tax credit policies and further focus on its US operations. FREYR SPAC Investor Presentation 08/2021 A New Era After months of execution matters and uncertainties, FREYR eventually came up with a fresh and radical plan. On 11/06/2024 the company released its Q3 2024 results and announced its strategic transformation by acquiring Trina Solar's US manufacturing assets and major leadership and organisational changes. Trina Solar is a China-based, globally operating, leader in solar cell and module production. The transaction will place FREYR in a leading position regarding US solar module and cell production, provide immediate revenue streams, reshape a pre-production company into a profitable growth one, and enhance FREYR's product portfolio. The plan will currently focus on the US operations. The acquired solar module facility in Wilmer, Texas started production on 11/01/2024. The solar cell facility is under development and is expected to commence production in the second half of 2026. In tandem with the Giga America facility battery energy storage system, solar module and cell production will integrate FREYR solutions. FREYR 11/2024 Investor Presentation Regarding leadership changes, Daniel Barcelo, FREYR's BoD Chairman and former Alussa CEO, will be the new CEO of FREYR effective immediately, Mingxing Lin coming from Trina Solar will join in the role of Chief Strategy Officer and member of the BoD subject to closing of the transaction, Dave Gustafson will be appointed Chief Operating Officer, Peter del Vecchio is joining as Interim Chief Legal Officer, and Co-founder Tom Einar Jensen is appointed CEO of FREYR Europe. FREYR 11/2024 Investor Presentation And What About Europe? The European operations matters probably pushed FREYR to pursue more actively and prioritize its US opportunities. Tom Einar Jensen will focus on FREYR's European operations and the optimization and monetization of its European portfolio, including the CQP and Giga Arctic facilities in Norway, and the LFP cathode facility in Vaasa, Finland. It should also be mentioned that FREYR parted ways with 24M and terminated the 24M license. European operations progress remains to be seen as the company didn't provide a clear plan. FREYR 11/2024 Investor Presentation Valuation FREYR was a pre-production unprofitable company but is now expected to start realizing revenue effective immediately. The P/BV ratio is 0.53 (Industrials sector median of 3.02). The company forecasts ~$100M EBITDA for 2025. Its market cap currently stands at ~$288M, and its EV at ~$123M. A forward 2025 EV/EBITDA ratio would be ~1.23. Acknowledging the Trina Solar agreement though would result in an EV/EBITDA ratio of ~4.4. Compared to the ~12.61 sector median indicates FREYR is undervalued and could have been trading at least x2 or x3 of its current market cap on the road to 2025. Looking into future forecasts, it is clear that the company aims to grow significantly in the coming years and expectations would be for a much higher valuation. However, certain parameters such as execution or funding etc. make these assumptions speculative. FREYR 11/2024 Investor Presentation Risks  FREYR is an emerging growth, microcap company and its stock price may present extreme volatility. The ambitious FREYR plan may need additional funding and the company may issue debt or sell stock, diluting shareholders. The new plan has just been released, and it has to be proven, given FREYR's history with execution issues. Trump administration may introduce policy changes regarding the green transition or tariffs regarding China-related parties. The company will face competition and may fail to gain the expected market share. European portfolio management remains quite unclear.  Conclusion  To cut a long story short, FREYR should be seen as a different company than it was until now. Its operation in a booming ecosystem, its integration with the acquisition of Trina Solar US facility, and its aspirations to be a leader in solar module/cell production and battery systems combined with its relatively low valuation presents an intriguing case. The acquired facility provides FREYR with revenue and an EBITDA-positive path to 2025. Leadership changes seem to be in the company's best interest. On the other hand, European portfolio operations and funding plans remain quite unclear, the ambitions for FREYR to be a leading company may require excessive funding needs in the future and the execution of the new plan remains to be seen. Thus, although the latest developments are certainly positive, investors shouldn't go all-in but seek momentum to initiate a position while keeping in mind that more bullets may be needed in the future and things might not go as expected.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2482497244"}