Yahoo Finance
Filing
June 18, 2021
Mar. 31, 2021 Data, all number is in EU€
Mar. 31, 2021 Data, all number is in EU€
Price: $0.26. Shares: 113m, Cap: $29m.
1.Business
(1) History
(1) History
The company was founded by Dr. Thilo Senst in 2004 in German. Originally it was called GBT and today it is still the operating subsidiary of GBLT. Dr. Senst was the CEO of GBT since 2008. GBT was formed as a licensee of AGFAPHOTO for battery products. AGFAPHOTO was well known old photo film maker in Europe similar to Kodak. Later it entered a license with Polaroid for lighting and mobile power storage. It also entered a license with Kodak for mobile power storage as well.
Since 2015, it was able to generate around €20m+ annual revenue till 2019, however, its margin was also down from 10% to 5% level. As a result, the gross margin stayed at the €1m level. It had incurred €1m to €1.5m losses in those years. The company was IPOed in 2018 in TSXV through a reverse merger. That also added around €1m loss in 2018.
During the start of the pandemic, the company started its own PPE product line called Dr. Senst including masks, sanitizers, and thermometers.
In 2020, its margin was back to 12% and revenue also grew over 15%. As a result, its gross margin tripled to close to €3m and made a real income of €1m.
In early 2021, it entered a US$7.5m contract to supply private label batteries for a customer. Later in Q2, it entered a US$20m supply agreement for the next 3 years. As a result, in Q1 2021, it has tripled its revenue and generated around €400k in real income. The battery contract is estimated to add €7m for the company each year for the next 3 years, although it might add much more in 2021 than the other 2 years.
(2) Major business
1) Batteries: Household alkaline and lithium batteries carry the brand name AGFAPHOTO. It should have around a 10% gross margin. Also, it is the supplier for the private labels of at least two customers. The private label might only have around a 5% gross margin.
2) Mobile power storage: The big portable power bank which can be used as an emergency power supply etc. Originally, it is under the brand name Polaroid. Now it is under the brand name Kodak. This might have around over a 20% margin.
3) PPE: Under its own brand Dr. Senst. Including masks, thermometer, sanitizers. Currently, there is a bug repellent is under development. PPE product is its highest-margin product of over 20%.
4) Lighting products: Under the brand name Polaroid. Now it is under the brand name: Avide/ENTAC. It is now focusing on LED lighting. The sales of lighting seem affected by the pandemic quite a bit.
Unfortunately, there are no revenue numbers for each of these products. Its major market seems to be German. Major customers are a retail chain and a drug store chain. It does not have any product development or manufacturing facilities. It solely relies on its supplier(most likely from China) to provide all those.
(3) Industry
Tier one(A brand) producers for household batteries are Duracell and Energizer. AGFAPHOTO is competing with tier 2(B brand) producers such as Panasonic, Samsung, etc. There are also private label batteries as well like in Costco, Walmart, Amazon.
The most popular brand of mobile power storage seems to be Jackery. Mainly used in camping or RV etc.
2. Management
(1) Management
Dr. Thilo Senst: Before found GBT, he was the CEO of TURA AG from 1996 to 2005. It is also in the photo film-related business.
In 2008, he was declared personal bankruptcy by a German court and in 2014, that bankruptcy was discharged. Don't know the reason.
(2) Ownership and compensation
Based on 2019 data, Dr. Senst holds 77m shares, around 67% of total shares. His compensation for 2018 and 2019 was less than €100k which was even lower than the COO's.
3. Financial data
Notes: Debt and cash
(1) Currently around €1.5m in debt.
(1) Currently around €1.5m in debt.
Notes: Share information
Share outstanding: 113m, around 6m options at a very low price.
4. Valuation and comments
(1) In the next 3 years, the new private-label battery deal might add €10m, €6m, €6m revenue each year. That will generate an extra €500k, €300k, €300k in extra gross gross profit while not adding too much cost.
(1) In the next 3 years, the new private-label battery deal might add €10m, €6m, €6m revenue each year. That will generate an extra €500k, €300k, €300k in extra gross gross profit while not adding too much cost.
(2) Currently, the company is traded around CAD$29m which is around €20m, about 20 times P/E based on 2020 real income of €1m. It is not really cheap, however, the expected growth could justify the price paid.
(3) Generally, this is a very competitive business and it is not a great place to do business. However, it seems that the company has a very strong relationship with its clients. It was able to maintain and create new business with the existing clients including its products and private label deals.
(4) It seems to manage the production and supply chain quite well and maintained a high quality of products and deliveries. Its relationship with its supplier seems good and the business is very capital-light.
5. Risk
(1) The company's growth is not without risk. It could lose major contracts or customers or etc.
(1) The company's growth is not without risk. It could lose major contracts or customers or etc.
(2) Its supply chain will also have the risk of having trouble.
(3) It might maintain current sales but the margin could go down again.
6. Conclusion
The company has great potential going forward but with some risk. The current price is acceptable but not very cheap and shouldn't be heavily invested.
7.Links
