Trackwise Designs — Year-end slowdown in sales

Trackwise Designs (LN: TWD)

Last close As at 04/11/2024

19.00

−9.00 (−47.37%)

Market capitalisation

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Research: TMT

Trackwise Designs — Year-end slowdown in sales

Trackwise has announced that it expects FY20 revenues to be c £6.1m, which is lower than our estimate, reflecting disruptions to supply chains caused by tighter coronavirus restrictions and uncertainty about the Brexit deal. However, careful cost control means that management expects adjusted operating losses to be c £0.2m, in line with our estimates. We have updated our FY20 forecasts but leave our FY21 estimates, which are underpinned by an order worth up to £38m over three years from a UK electric vehicle (EV) OEM, unchanged.

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TMT

Trackwise Designs

Year-end slowdown in sales

Post-close trading update

Tech hardware & equipment

25 January 2021

Price

300p

Market cap

£85m

Net cash (£m) on 31 December 2020 (excluding IFRS 16 lease liabilities)

11.2

Shares in issue

28.4m

Free float

68.4%

Code

TWD

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

22.1

9.9

229.6

Rel (local)

17.7

(5.1)

266.3

52-week high/low

370p

71p

Business description

Trackwise Designs is a UK manufacturer of specialist products using printed circuit technology. These include a lightweight replacement for conventional wiring harnesses known as IHT and RF antennae. In FY19, 64% of revenues related to exports.

Next events

FY20 results

March 2021

Analyst

Anne Margaret Crow

+44 (0)20 3077 5700

Trackwise Designs is a research client of Edison Investment Research Limited

Trackwise has announced that it expects FY20 revenues to be c £6.1m, which is lower than our estimate, reflecting disruptions to supply chains caused by tighter coronavirus restrictions and uncertainty about the Brexit deal. However, careful cost control means that management expects adjusted operating losses to be c £0.2m, in line with our estimates. We have updated our FY20 forecasts but leave our FY21 estimates, which are underpinned by an order worth up to £38m over three years from a UK electric vehicle (EV) OEM, unchanged.

Year end

Revenue (£m)

EBITDA
(£m)

PBT*
(£m)

EPS
(p)

DPS
(p)

P/E
(x)

12/18

3.5

0.6

0.3

2.1

0.0

N/A

12/19

2.9

0.6

0.2

1.1

0.0

N/A

12/20e

6.1

0.7

(0.3)

0.35

0.0

N/A

12/21e

14.3

2.7

1.3

4.86

0.0

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Double hit of Brexit uncertainty and coronavirus

Towards the year-end customers of both the Improved Harness Technology (IHT) and Advanced PCB (printed circuit board) divisions delayed purchases. Stricter coronavirus restrictions in the UK and overseas and concerns about a potential no-deal Brexit affected logistics chains and thus availability of components. Management expects trading activity to normalise later in FY21.

Underlying growth drivers unaffected

The main growth drivers are broadly unaffected by either the pandemic or Brexit. IHT revenues for FY20 and FY21 are supported by the major EV contract. Having delivered samples to its lead electro-surgical catheter customer, a large US medical OEM, management anticipates further orders in 2021 and is targeting early 2022 for production revenues. While the commercial aerospace industry has been badly affected by the pandemic, investment in new technology such as IHT, which cuts both carbon emissions and operating costs, continues. Moreover, given the time to test new products in the aviation industry, management does not expect any of the 30+ programmes it is working on in the sector to move to volume production until 2023. The number of IHT customers and qualified opportunities (ie where the two parties have signed a non-disclosure agreement and there is ongoing collaboration) has risen from 82 in June to 87 at the year end.

Valuation: Addressing several high-potential sectors

While our peer multiples-based analysis shows Trackwise trading at a premium to its peers on all metrics, this approach fails to recognise the potential of the IHT business so we have augmented it with a scenario analysis, which is presented in our September note. This explores how the three key segments in which Trackwise has developed prototype IHT products for customers (EVs, medical devices and aerospace) each have the potential to generate revenues of at least £100m at even relatively modest levels of market penetration.

Changes to estimates

Exhibit 1: Revisions to estimates

£m

2020e

2021e

Old

New

Change

Old

New

Change

Revenues

7.1

6.1

-14.0%

14.3

14.3

0.0%

EBITDA

0.7

0.7

0.0%

2.7

2.7

0.0%

Normalised PBT

(0.3)

(0.3)

0.0%

1.3

1.3

0.0%

Normalised basic EPS (p)

0.35

0.35

0.0%

4.86

4.86

0.0%

Dividend per share (p)

0.00

0.00

0.0!

0.00

0.00

0.0%

Net debt/(cash)

(11.6)

(11.2)

-3.2%

(1.0)

(0.7)

-32.8%

Source: Trackwise, Edison Investment Research

We leave our estimates broadly unchanged. The modifications are:

lower FY20 revenues,

lower FY20 operating costs, and

higher levels of capitalised R&D in FY20.

We leave our FY21 estimates unchanged for the time being, while noting potential for both underperformance and outperformance. On the one hand, we see potential for a recession as the government support for businesses and households during the coronavirus pandemic is withdrawn. This may adversely affect demand for products manufactured by Trackwise’s Advanced PCB customers. In addition, the call-off of parts under the EV programme may slip so that some sales currently scheduled for FY21 are actually delivered during FY22. On the other hand, given the growing IHT pipeline, we see opportunities to win additional new business for delivery during FY21.

Valuation

Peer multiples

Exhibit 2: Peer multiples

Name

Market cap ($m)

EV/sales 1FY (x)

EV/sales 2FY (x)

EV/EBITDA 1FY (x)

EV/EBITDA 2FY (x)

P/E 1FY (x)

P/E 2FY (x)

CAGR*

EBITDA margin 1FY (%)

EBITDA margin 2FY (%)

AT & S

1,330.8

1.3

1.1

5.8

4.7

23.4

14.2

15.4%

21.9

23.7

CMK

258.9

0.5

0.5

12.6

5.6

(12.0)

25.7

-3.5%

4.3

8.8

Compeq Manufacturing

1,819.8

0.9

0.8

4.8

4.1

10.5

8.9

9.1%

18.5

19.8

Ibiden

6,912.4

2.3

2.0

9.8

7.0

32.3

24.6

10.8%

23.4

29.0

KCE Electronics

1,963.4

5.2

4.6

26.7

20.1

52.3

31.6

3.9%

19.5

22.7

Meiko Electronics

498.9

0.9

0.9

8.5

7.7

18.7

12.6

5.3%

11.0

11.0

Tripod Technology

2,452.8

1.0

1.0

5.8

5.1

11.9

11.0

3.4%

18.0

19.1

TTM Technologies

1,514.4

1.0

1.0

7.4

7.4

14.3

11.4

-10.6%

13.2

13.7

Unimicron Technology

5,144.0

1.9

1.7

12.1

8.7

34.3

23.9

6.9%

15.4

20.0

Zhen Ding Technology

3,894.5

0.9

0.8

5.0

4.0

12.4

9.9

9.9%

18.0

19.7

Mean

1.6

1.4

9.9

7.4

23.3

17.4

16.3

18.8

Trackwise Designs

116.7

14.1

6.0

122.7

31.4

856.1

61.7

121.5%

11.5

19.3

Source: Refinitiv, Edison Investment Research. Note: Prices at 21 January 2021. Grey shading indicates exclusion from mean. *CAGR is compound average growth in revenue between year 0 and year 2.

Although Trackwise’s share price fell by 7% on the day of the post-close trading update, overall the share price has doubled since the announcement of the series production order for the EV manufacturer in September. At current levels, our peer multiples-based analysis shows Trackwise’s shares trading at a premium to the sample means on all metrics. However, based on our estimates, Trackwise is expected to grow revenues much more strongly than any of the sample between FY19 and FY21. Moreover, the IHT business has the potential to deliver growth that is faster than the average for our sample not just for the period covered by our estimates, but for several years beyond that, so the peer multiple-based approach fails to recognise the potential of the IHT activity in the longer term. Although we do not present detailed FY22 estimates, we provisionally estimate that expansion could support FY22 revenues of at least £24m. We therefore supplement the peer multiples approach with a scenario analysis.

Scenario analysis

In our September note, we presented a scenario analysis that looked at the potential revenues achievable if the company was successful in penetrating specific target markets. This approach showed the three key segments in which Trackwise has developed prototype IHT products for customers (EV, medical devices and aerospace) each have the potential to generate revenues of at least £100m at relatively modest levels of market penetration. The contract with the EV manufacturer announced in September is the first demonstration of uptake of the technology at scale.

Exhibit 3: Financial summary

£m

2018

2019

2020e

2021e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

 

 

3.5

2.9

6.1

14.3

Cost of Sales

(2.4)

(1.8)

(3.6)

(8.9)

Gross Profit

1.1

1.1

2.5

5.4

EBITDA

 

 

0.6

0.6

0.7

2.7

Normalised operating profit

 

 

0.3

0.3

(0.2)

1.5

Amortisation of acquired intangibles

0.0

0.0

0.0

0.0

Exceptionals

(0.0)

(0.1)

1.3

0.0

Share-based payments

(0.2)

(0.2)

(0.4)

(0.3)

Reported operating profit

0.1

(0.1)

0.7

1.2

Net Interest

(0.1)

(0.1)

(0.1)

(0.2)

Joint ventures & associates (post tax)

0.0

0.0

0.0

0.0

Exceptionals

0.0

0.0

0.0

0.0

Profit Before Tax (norm)

 

 

0.3

0.2

(0.3)

1.3

Profit Before Tax (reported)

 

 

0.1

(0.1)

0.6

1.0

Reported tax

0.0

0.1

0.4

0.3

Profit After Tax (norm)

0.3

0.2

0.1

1.4

Profit After Tax (reported)

0.1

(0.0)

1.0

1.3

Minority interests

0.0

0.0

0.0

0.0

Discontinued operations

0.0

0.0

0.0

0.0

Net income (normalised)

0.3

0.2

0.1

1.4

Net income (reported)

0.1

(0.0)

1.0

1.3

Basic average number of shares outstanding (m)

11.8

14.7

20.8

28.4

EPS - normalised (p)

 

 

2.14

1.13

0.35

4.86

EPS - diluted normalised (p)

 

 

2.05

1.06

0.34

4.71

EPS - basic reported (p)

 

 

0.63

(0.33)

4.69

4.70

Dividend (p)

0.00

0.00

0.00

0.00

Revenue growth (%)

N/A

(16.2)

110.6

132.9

Gross Margin (%)

30.3

37.9

41.4

37.7

EBITDA Margin (%)

17.8

19.7

11.5

19.3

Normalised Operating Margin

9.4

8.9

-3.9

10.8

BALANCE SHEET

Fixed Assets

 

 

3.9

6.8

11.7

21.5

Intangible Assets

2.6

4.3

6.3

6.9

Tangible Assets

1.3

2.5

5.4

14.6

Investments & other

0.0

0.0

0.0

0.0

Current Assets

 

 

4.2

3.1

17.6

15.0

Stocks

0.4

0.6

2.3

3.5

Debtors

0.8

1.7

2.2

3.5

Cash & cash equivalents

2.8

0.6

12.8

7.7

Other

0.2

0.3

0.3

0.3

Current Liabilities

 

 

(1.0)

(1.4)

(1.9)

(2.3)

Creditors

(0.8)

(1.0)

(1.6)

(2.0)

Tax and social security

0.0

0.0

0.0

0.0

Short term borrowings

(0.2)

(0.3)

(0.3)

(0.3)

Other

0.0

0.0

0.0

0.0

Long Term Liabilities

 

 

(1.2)

(2.5)

(2.5)

(7.9)

Long term borrowings

(0.4)

(1.3)

(1.3)

(6.7)

Other long-term liabilities

(0.8)

(1.3)

(1.3)

(1.3)

Net Assets

 

 

5.9

6.0

24.9

26.3

Minority interests

0.0

0.0

0.0

0.0

Shareholders' equity

 

 

5.9

6.0

24.9

26.3

CASH FLOW

Op Cash Flow before WC and tax

0.6

0.6

0.7

2.7

Working capital

(0.7)

0.1

(1.7)

(2.2)

Exceptional & other

(0.0)

0.0

(0.2)

0.0

Tax

0.0

0.0

0.4

0.3

Net operating cash flow

 

 

(0.1)

0.7

(0.8)

0.9

Capex

(1.3)

(2.7)

(3.0)

(5.6)

Acquisitions/disposals

0.0

0.0

(1.3)

(0.2)

Net interest

(0.1)

(0.1)

(0.1)

(0.2)

Equity financing

4.4

0.0

17.5

0.0

Dividends

0.0

0.0

0.0

0.0

Other

0.1

0.2

0.0

0.0

Net Cash Flow

3.2

(1.9)

12.3

(5.2)

Opening net debt/(cash)

 

 

0.9

(2.3)

1.0

(11.2)

FX

0.0

0.0

0.0

0.0

Other non-cash movements

0.0

(1.4)

0.0

(5.4)

Closing net debt/(cash)

 

 

(2.3)

1.0

(11.2)

(0.7)

Source: Company data, Edison Investment Research

General disclaimer and copyright

This report has been commissioned by Trackwise Designs and prepared and issued by Edison, in consideration of a fee payable by Trackwise Designs. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Trackwise Designs and prepared and issued by Edison, in consideration of a fee payable by Trackwise Designs. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

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Research: Metals & Mining

Kopy Goldfields — Organic growth to more than 100koz in Russia

Kopy Goldfields produced 53koz of gold equivalent in FY20 following the reverse takeover by Amur Zoloto and plans to grow organically to 100koz within five years. This does not include the substantial potential of the 1.8Moz Krasny project, where Kopy retains 49% ownership. Kopy Goldfields is investigating a possible listing on the Nasdaq Nordic main market, which could enhance its appeal to a broader range of investors.

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