Altech Batteries [ASX: ATC] Update
Materials
Bringing Innovative Battery Technologies to Market
Altech Batteries Ltd (ASX: ATC), a specialised battery technology company in Perth, Australia, is advancing two groundbreaking battery projects that are being commercialised in Germany. Our updated valuation places Altech’s share value at A$0.20, representing a 341% upside from its current share price of A$0.046. Although speculative for investors, the joint venture (JV) with world leading German R&D institute Fraunhofer IKTS positions Altech at the forefront of innovative battery technologies development. As the world increasingly focuses on decarbonisation, the demand for these advancements continues to grow. We have raised our price target due to the progress Altech has made over the year moving towards commercialisation.
Silumina AnodesTM – Altech poised to capitalise on huge EV battery market growth over the next decade
Altech has developed a lithium-ion battery anode by combining silicon particles with conventional graphite, achieving a 55% increase in energy capacity. With rising demand for EVs, the silicon-based anode market is projected to grow at a CAGR of 48%, reaching $137 billion by 2036. Altech has completed a Definitive Feasibility Study (DFS) for an 8,000tpa plant in Germany and has an operational pilot plant, positioning it for rapid commercialisation. Financially, the project shows strong metrics: a pre-tax NPV10 of €684 million, an IRR of 34%, and an annual EBITDA of €105 million, indicating robust economic viability.
CERENERGY® Battery prototype shows strong performance, paving the way for commercialisation with the first offtake deal agreed
Altech and Fraunhofer has successfully produced their first 60kWh CERENERGY® ABS60 BatteryPack prototype, showcasing exceptional efficiency, stability, and high temperature performance. With a lifespan of over 15 years, twice that of lithium-ion batteries, these impressive results show its commercial viability. A recent Offtake Letter of Intent with Zweckverband Industriepark Schwarze Pumpe secures demand for 30MWh of CERENERGY® GridPacks annually, positioning Altech as a key player in renewable energy. With the battery storage market projected to grow over 30% CAGR through 2028, Altech is well positioned to capitalise in this burgeoning market.
Valuation range of A$0.17–0.24 per share
Our DCF model values both the Silumina AnodesTM and CERENERGY® Batteries projects, estimating a base-case valuation of A$0.17 per share and a bull-case of A$0.24 per share. These valuations are based on assumptions from the respective DFS results of the projects, adjusted for minority interests. The modest increase in target prices since our May 2024 research note reflects Altech’s steady progress towards commercialisation, with key milestones such as the Silumina AnodesTM pilot plant construction and prototype shipments to end-line customers for testing significantly enhancing the likelihood of eventual commercialisation. The key risks to our investment thesis include uptake, competition, exchange rate, and funding risks.