Altech Batteries [ASX: ATC]
Materials
Commercialising revolutionary battery technologies
Altech Batteries Ltd (ASX: ATC) is a specialty battery technology company based in Perth, Western Australia. Altech is concurrently progressing two revolutionary battery technology projects towards commercialisation in Germany. Although still speculative from an investing point of view, Altech’s revolutionary projects put it among the pioneers in commercialising innovative battery technologies, which are in soaring demand as the global push towards decarbonisation of economies continues to change the way we live.
Silumina AnodesTM - Altech’s path to boost Li-ion battery’s energy capacity
Altech has successfully combined silicon particles with regular battery grade graphite to produce a lithium-ion battery electrode that can hold > 30% energy compared to a conventional graphite-only anode material. Due to the escalating demand for EVs and the rivalry between EV manufacturers to produce higher range EVs, Research Nester projects the silicon-based anode market to experience a compound annual growth rate (CAGR) of approximately 48% from 2024 to 2036, reaching a massive size of US$137 billion by the end of 2036. ATC completed a Definitive Feasibility Study (DFS) for The Silumina AnodesTM project in December 2023 to construct an 8,000tpa silicon alumina coating plant in the state of Saxony, Germany. The DFS demonstrates compelling project economics, a pre-tax NPV10 of €684m with an estimated Capex of only €112m.
CERENERGY® Battery: the solution to the burgeoning grid storage market
Solid-state batteries use solid electrolytes instead of the liquid electrolytes found in Liion batteries, therefore potentially solving many problems of Li-ion batteries, such as flammability, limited voltage and poor cycling performance. Altech’s Sodium Chloride CERENERGY® Solid State (SCSS) Battery technology uses common table salt (sodium chloride) and nickel granules as cathode materials. Therefore, it does not use copper, cobalt, graphite or lithium, which are expensive and prone to supply chain uncertainties while offering higher energy density, higher durability, resistivity to ambient temperature changes, and being explosion proof, making the CERENERGY® battery highly suitable for grid storage application. According to Statista, the worldwide market for battery energy storage is projected to grow by a CAGR of more than 30% to 2028 as the rapidly expanding renewable energy capacity demands greater grid storage capacities to bring stability and reliability to the power grid.
Valuation range of A$0.15–0.21 per share
We have valued ATC at A$0.15 per share in a base-case scenario and A$0.21 per share in a bull-case scenario using a DCF approach. It is of utmost importance to note that our valuation of Altech is solely based on the value of the Silumina AnodesTM Project, and we have not included any valuation from the CERENERGY® Batteries Project, which offers substantial upside potential to our current valuation range. Our DCF model for is broadly based on the assumptions of Silumina AnodesTM DFS and net of AAM’s 25% interest in the project. The key risks to our investment thesis include uptake risk, competition risk, exchange rate risk, and funding risks.