The automotive industry is composed of varied smaller industries. The industry includes providers of repair and maintenance services, vehicles, parts and tools, marine vessels and motorcycles, and some non-car manufacturing operations. The performance of all these industries has changed over the period, on the back of technological advancements and new customer requirements.
In the automotive sector, demand is increasing for fuel-efficient cars, with strict government regulations to meet fuel emission standards. As a result, number of manufacturers focusing on the production of light-weight vehicles is increasing. Additionally, demand for carbon fibre wheels is growing, as they help lower the weight of the vehicle. Carbon fibre has the primary advantage of being lighter than traditional automotive wheel materials, primarily steel and aluminium, for a given level of stiffness and durability.
Here in this article, we are discussing Carbon Revolution Limited (ASX: CBR), which got listed on the Australian Securities Exchange (ASX) on 29 November 2019,
About the Company
Carbo Revolution Limited, founded in 2007, is a new technology manufacturing business based in Waurn Ponds, Australia. The company is engaged in the manufacturing and sale of carbon fibre wheels. CBR is also involved in the research and development projects related to carbon fibre wheel technology. Carbon Revolution Limited caters its lightweight wheel technology to the global automotive industry.
The company’s products are underpinned and aided by an extensive intellectual property portfolio, including several granted and pending patents. On a global level, CBR is the only company that tasted success with the development and production of carbon fibre automotive wheels (single piece) to the quality standards of original requirement manufacturers.
The company has several collaborations for technology development and product testing, globally, including Deakin University in Australia. Moreover, CBR has an ISO certified, state-of-the-art factory, which makes the company a Tier-1 supplier to the leading automotive manufacturers, globally.
CBA – A CBR Substantial Holder
On 3 December 2019, the company announced that Commonwealth Bank of Australia (ASX: CBA) and its related bodies corporate become a substantial holder in CBR with effect from 29 November 2019. The number of securities held with the substantial holder stood at 6,485,473 fully paid ordinary shares, translating into a 5.09 per cent of voting rights.
CBR Raises $90.1 Million in ASX Listing
Carbon Revolution made another ASX announcement on 3 December 2019 related to its public listing on 29 November 2019 with a market capitalisation of $331.1 million. The Initial Public Offering (IPO) of the company raised $90.1 million, which included a primary raise of $30 million and a secondary sell-down of $60.1 million.
The company plans to use the additional capital from the listing towards industrialisation as well as enhancing the manufacturing process, targeted towards lowering unit costs and boosting manufacturing capacity, according to CBR CEO Jake Dingle.
Carbon Revolution also confirmed that it continues to break monthly production records, as the company is targeting an increase of its annualised production capacity from 12,000 wheels per annum in August 2019 to approximately 32,000 wheels per annum by June 2020. Moreover, the company confirmed that CBR is on track to become Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) positive during the fourth quarter of FY20, which is in line with the prospectus forecast.
Carbon Revolution CEO Jake Dingle while giving the business update, commented:
Financial Performance for FY 2019
On 28 November 2019, the company updated the market with its performance for the year ended 30 June 2019. Few highlights from the financial report are as follows:
- Wheel sales increased to $13.8 million in FY19 against $6.7 million during the same period a year ago.
- Revenue of the company grew to $15.1 million from $8.1 million in FY18.
- CBR incurred a loss after income tax for the year of 27.2 million.
- Cash and cash equivalents soared to $45.8 million from $19.1 million at the end of 30 June 2018.
- Cash outflows in operating activities stood at $19.91 million.
- Cash outflows in investing activities reached $22.75 million.
- Cash inflows towards financial activities of the business were reported at $69.32 million.
CBR Enters SUV Market with New Deal
On 27 November 2019, the company announced another success, as it signed a supply deal for its one-piece carbon fibre wheels, which would be specifically designed for a sports utility vehicle of a global automotive entity.
The deal marks the entry of Carbon Revolution Limited in the sports utility vehicle market and brings the total number of globally recognised automotive manufacturers to five in the company’s client list.
In August 2019, Carbon Revolution had received a grant from the Commonwealth Government, under which the company would design carbon fibre wheels for the Defence Force of Australia.
Appointment of Chief Financial Officer
In early September 2019, CBR unveiled the appointment of a new Chief Financial Officer. Mr Gerard Buckle, an experienced business executive, had previously worked at senior executive positions in listed and unlisted companies, such as Ernst and Young (E&Y), Incitec Pivot, Orica, Bonlac Foods and Repco.
The new executive addition is expected to enhance the company’s operations and capabilities.
CBR Signs Memorandum of Understanding (MoU) with Mitsui
Carbon Revolution Limited, in the month of September 2019, also unveiled to have signed a Memorandum of Understanding with Mitsui & Co., Ltd. The memorandum of understanding reflects the joint activities of Carbon Revolution and Mitsui towards the development of a strategic partnership, including opportunities for support and sourcing of raw material inputs. Other key elements of the partnership are logistics services and coordination of activities
5-Day Stock Performance up 8.23%
The stock of CBR closed the day’s trade at $3.420 on ASX on 9 December 2019, down by 3.662 per cent from its previous closing price. The company has approx. 127.34 million outstanding shares and a market cap of $452.06 million. The stock has generated a positive return of 8.23 per cent over the last five days, while since listing the stock has delivered a 2.90 per cent return.
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