AlphaValue Corporate Services Fundamental Analysis FR
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AlphaValue Corporate Services
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Blackstone Resources

CR
Bloomberg   BLS SW
Batteries-Battery Sys  /  Switzerland  Web Site   |   Investors Relation
Banking on big-bang battery technology initiatives
Target
Upside 339%
Price (CHF) 2.66
Market Cap (CHFM) 114
Debt

At the end of 2020, Blackstone’s total debt stood at CHF14m. The majority (c.64%) of the group’s borrowings was owed to a related party, i.e. Ulrich Ernst (CHF8.8m; CEO and largest shareholder of Blackstone). On the other hand, third-party borrowings were CHF5m, largely comprising convertible notes, right-of-use liabilities and a COVID-19 bridging loan. With well spread-out debt maturities, there’s no near-term debt repayment pressure, which is a fortunate positioning, given that the respective divisions remain in the investment phase and, hence, negative FCFs should sustain.

However, compared with 2019, the group’s total debt reduced significantly, with Adriatica’s obligations being retired completely. Hence, the group has adequate balance sheet flexibility to pursue its (battery) growth initiatives. Moreover, Blackstone has secured: 1/ CHF30m equity funding commitment from Luxembourg-based GEM Global Yield (an alternative investment group); 2/ CHF20m convertible loan facility valid upto three years; and 3/ €40m of debt funding secured in August 2021, thereby allaying any near-term financing concerns, especially for battery R&D.

Owner-financed debt structure has played an instrumental role in averting any credit crisis to date, given that most of the group’s assets are still in the development stage and (healthy) cash flows are missing. However, as Blackstone pursues its ambitions to make a major (capital-intensive) foray into battery manufacturing, access to (state-sponsored grants) and/or additional (external) borrowings should be a critical determinant of the group’s overall success.

While the 2021 credit risk (DDD) is a reflection of high (battery) investments resulting in negative FCFs and the delayed kick-start at mining/smelting operations, the group is well-positioned – given that apt financing has been secured to pursue medium-term growth ambitions. Moreover, with further strategic and/or financing deals not being ruled out towards the end of 2021, immediate-term rating improvements are probable, besides operations gradually inching towards potential resulting in rating improvements from 2022 onwards.

Funding - Liquidity
  12/20A 12/21E 12/22E 12/23E
EBITDA CHFM -3.06 -8.76 0.20 68.0
Funds from operations (FFO) CHFM -3.10 -7.11 3.27 65.1
Ordinary shareholders' equity CHFM 39.0 77.8 114 144
Gross debt CHFM 13.9 48.7 40.9 38.6
   o/w Less than 1 year - Gross debt CHFM 1.22 1.22 0.98 0.78
   o/w 1 to 5 year - Gross debt CHFM 3.43 3.45 12.9 13.8
   of which Y+2 CHFM 2.28 0.38 0.38 0.38
   of which Y+3 CHFM 0.38 0.38 0.38 1.15
   of which Y+4 CHFM 0.38 0.38 1.15 5.50
   of which Y+5 CHFM 0.38 2.30 11.0 6.75
   o/w Beyond 5 years - Gross debt CHFM 9.21 44.0 27.0 24.0
 + Gross Cash CHFM 0.59 28.5 10.7 6.29
 = Net debt / (cash) CHFM 13.3 20.2 30.2 32.3
Bank borrowings CHFM 0.00 0.00 0.00 0.00
Issued bonds CHFM 0.52 0.52 0.52 0.52
Financial leases liabilities CHFM 0.00 0.00 0.00 0.00
Other financing CHFM 13.3 48.2 40.4 38.0
Gearing (at book value) % 53.9 21.5 22.2 21.8
Equity/Total asset (%) % 38.1 52.6 58.4 63.2
Adj. Net debt/EBITDA(R) x -4.34 -2.31 149 0.47
Adjusted Gross Debt/EBITDA(R) x -4.58 -5.51 199 0.55
Adj. gross debt/(Adj. gross debt+Equity) % 26.4 38.3 26.2 20.8
Ebit cover x -6.89 -35.4 -42.3 38.7
FFO/Gross Debt % -22.2 -14.7 8.13 173
FFO/Net debt % -23.4 -35.2 10.8 202
FCF/Adj. gross debt (%) % -28.1 -111 -150 -32.9
(Gross cash+ "cash" FCF+undrawn)/ST debt x -2.73 -20.3 -50.6 -7.78
"Cash" FCF/ST debt x -2.72 -43.6 -61.5 -15.8
Credit Risk
Covenants
Changes to Story : 30/11/2021, Changes to Forecasts : 30/11/2021.