Publication date: November 7, 2024

We frequently spotlight companies that are innovative, promising and have navigated the cycle of excitement and challenges. Consider JustEatTakeAway and Pharming. We may place the protagonist of this article in the same context; Ebusco. Been through a lot and is ready for the next phase. Interesting!

Short introduction

Ebusco, established in 2012, is a Dutch company specializing in the production of electric buses. Its headquarters are located in Brabant, with additional offices in countries such as China and the United States. Currently, Ebusco has about 700 employees. The largest shareholders are founder Peter Bijvelds and ING Group. The customer group includes the well-known Connexxion and Qbuzz.

Since September of this year, a new CEO has been appointed. The experienced German Christian Schreyer replaces the duo Bijvelds and Peters who were previously at the helm together.

Ebusco has been listed on the Amsterdam Stock Exchange since October 2021.

What caused Ebusco's share price to fall so much?

Expectations were high at the time but several disappointing developments depressed sentiment and confidence. Here are some of the factors behind the downturn in recent years.

Ebusco struggled with significant losses in 2023, with a net loss of €120.1 million and sales of only €102.4 million, much lower than expected. These results were affected by production and supply chain problems, which put pressure on profitability.

Delays in production and supply chain problems prevented many buses from being delivered on time. This led to fines and reversed earnings, which affected financial stability and investor confidence.

Costs, especially due to increased personnel expenses and investments in inventory, proved difficult to manage. Ebusco's cash position declined significantly at the end of 2023, which has raised investor concerns that future financing may come under pressure.

Although Ebusco's order book has grown, revenues are not realized until the delivery of buses. The time between contracting and actual revenue generation can affect cash flow, especially if deliveries are delayed.

Given the current loss and disappointing results, investor sentiment around Ebusco has deteriorated, leading to selling pressure on the stock. There are also macroeconomic concerns about interest rates and economic slowdown that could negatively impact growth stocks such as Ebusco.

In 2024, the company proved unable to deliver 59 buses ordered to Qbuzz. Spare parts were also not delivered, which prevented 10% of Qbuzz's buses from running. Qbuzz claimed an agreed compensation because of the late delivery. When the company failed to pay that compensation, Qbuzz seized €1.2 million from Ebusco's bank accounts. The money was needed for salaries and the buses were almost ready in a factory in China. After the seizure, Ebusco initiated proceedings against Qbuzz, which served in October 2024. Ebusco lost the summary proceedings. The judge ruled that the cancellation of Qbuzz's order was justified, and so was the seizure. Directly after that, Ebusco decided to stop its production and outsource production, especially to China. Without these measures, bankruptcy would be imminent. In slimmed-down form, however, the company could remain active in the design of electric buses.

What is the current situation at Ebusco?

As stated, with the new CEO, there is clearly a breath of fresh air blowing through the troubled company. In addition to the experience Christian Schreyer brings with him, a possible advantage is that he comes from outside the company. This puts him in a better position to make changes to the culture and operations.

Ebusco announced in September 2024 that it plans to raise €36 million in new capital through a rights issue. This capital increase is part of a "turnaround plan" aimed at improving the company's operational and financial performance. The capital raised will be used to address production issues and get Ebusco back on a profitable path. The plan was recently presented to investors and confidence has now been expressed. Within the plan, consolidation from 5 shares to 1 share has also been introduced. This is to improve the marketability and appearance of the share.

This plan is part of Ebusco's broader efforts to strengthen its liquidity position and get production back on track, which is critical to ensuring the company's continuity and growth.

What is Ebusco's expectation?"

After a series of problems, it is time for Ebusco to put that period behind it. With the shareholders' expressed confidence and the appointment of the new CEO, there are positive signs. The company is focusing on designing electric buses and is less focused on producing them itself.

The outlook for Ebusco in 2024 is optimistic, despite the challenges of the past year. The main outlook is:

- Ebusco expects to achieve sales of more than €325 million in 2024, up significantly from €102.4 million in 2023. This is partly supported by a growing order book that rose to 1,719 buses in 2023.

- Ebusco plans to reduce personnel and operating costs in 2024. The modified assembly strategy, in which production is partly outsourced to partners, should ensure a more predictable production process and lower costs

- Ebusco aims to achieve positive EBITDA by the end of 2024, with profitability expected mainly in the second half of the year. This is related to the expected recovery in production rates and improved operational efficiency

- Ebusco continues to work on further optimizing the Ebusco 3.0 model, which is known for its low energy consumption (0.65 kWh per kilometer). The company expects that this model, along with other innovations, will contribute to its position in the zero-emission bus market

- With the new production site in Rouen and a stronger focus on productivity improvements, Ebusco hopes to further strengthen its financial performance and market presence in 2024.

- Ebusco's trajectory could potentially recover if the company succeeds in reducing costs and delivering on its positive outlook for 2024, including meeting revenue targets and achieving positive EBITDA.

What is the technical scenario for Ebusco?

For this, we look at the chart over the past year. The share price has risen sharply this week after it was announced that the issue has a high probability of success. At the time of writing, Ebusco is already trading at €4.35, up a quarter from yesterday's closing price.

The most likely scenario is a so-called relief rally. The problems of the past seem to be under control and possibly even largely over. A more positive wind seems to be blowing through the company. It doesn't take a whole lot at this price level for a significant recovery in percentage terms. Our mathematical system indicates a rise that could lead to the €12.50 to €16 zone. However, we have to give Ebusco time and the ride to this zone does not go in a straight line. The presentation of the annual figures on March 26, 2025, will reveal much about how the plan develops. Ahead of the figures and their commentary, Ebusco's share price may already recover to the stated price target.


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