Original-Research: Singulus Technologies AG (von NuWays AG): Under Review

Topic: Singulus released its preliminary Q2 numbers with sales slightly below and EBIT in line with our estimates. Even more importantly, financing of the company is currently unsecured, jeopardizing the Going Concern, which leads us to suspend our rating.

Q2 sales came in at € 20.1m, (-21% yoy, -2.4% qoq) below our estimates of € 22.5m (eNuW). With €  19.1m in order intake, demand in Q2 fell short of our expectations (-43% qoq; eNuW: €  30m). Order backlog decreased slightly (-1.7% qoq) to € 70.4m but remains at a solid level. EBIT came in at solid €  0.6m (vs € 0.2m in Q2´23, vs eNuW: € 0.5m), thanks to several cost-cutting measures.

Guidance revised. Management cut its FY24e sales guidance from € 120-130m to € 95-105m (eNuW old: € 97m) and EBIT from “low double-digit € m” to € 3.0-6.5m (eNuW old: € 0.2m). As flagged in our last update, the  profit warning  was already well  anticipated. However, the soft order intake put also a  question mark behind the new guidance and should burden top- and bottom line for the remainder of the year. We hence conservatively expecting only € 85.7m in sales and € -1.9m in EBIT in FY24e.

Financing beyond August not yet secured. CNBM is directly and indirectly the counterpart for € 30m of Singulus’ outstanding debt – directly as provider of a € 20m loan, granted in two tranches in March and April 2023 that are callable on August 4 th and on September 28th and indirectly as guarantor for another € 10m granted by the Bank of Shanghai. In order to secure the financing beyond August/September, Singulus has negotiated with CNBM the reorganization of the € 20m for months but has so far not reached an agreement yet. As a result, the company has requested CNBM to provide a solution for further financing by August 23rd . Further, Singulus is in parallel discussions with Bank of Shanghai regarding another € 10m loan with CNBM as guarantor. Still, Singulus has not come to a successful agreement yet.

Going Concern at risk. In the case that CNBM will reject to support further financing, a Going Concern of the company is at risk in our view. In light of the depency of CNBM from Singulus 1) as a supplier especially for Close Spaced Sublimation (CSS) machines in the production of CdTe solar modules and 2) as a shareholder, holding 16.75%, we see a certain likelihood that CNBM will be constructive in the end. However, as the financing and with that the Going Concern is at risk, we take the stock under review until the Going Concern of the business is secured.