Trackwise Designs' FY20 results show a resilient response to the pandemic while management expanded IHT capacity to meet the requirements of a multi-million order from an undisclosed UK electric vehicle (EV) OEM. This OEM has recently extended its supply and manufacture agreement with Trackwise from three years to four, increasing the total value by £16m to up to £54m. We note that the volume ramp-up under this agreement has been delayed by a quarter to H122, so we have revised our FY21 estimates, taking EPS from 4.9p profit to 1.0p loss.

While our peer multiples-based analysis shows Trackwise trading at a premium to its peers on all metrics, this approach fails to recognize the potential of the IHT business so we have augmented it with a scenario analysis, which is presented in our September initiation note. This explores how each of the three key segments in which Trackwise has developed prototype IHT products for customers (EVs, medical devices and aerospace) has the potential to generate revenues of at least £100m at even relatively modest levels of market penetration. 

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