VVPR - Does VivoPower International (NASDAQ:VVPR) Still Have More Upside?
(NewsDirect)
VivoPowerInternational (NASDAQ:VVPR) shares surged after recentannouncements, giving shareholders in excess of triple-digit returns.But as VVPR stock continues to make new 52-week highs, potentialinvestors on the sidelines may be questioning whether they might havemissed out entirely on the rally. Could the stock still have moreupside going forward?
Just to recap, on April 2, VivoPower subsidiary Tembo E-LVannounced that it would be going public via a merger with specialpurpose acquisition company Cactus Acquisition Corp. (CCTS), and uponclosing of the deal, the combined company would remain Nasdaq-listedunder the name Tembo Group. CCTS will issue 83.8 million shares inexchange for Tembo shares at $10 per CCTS share, which corresponds toa pre-money indicative equity valuation of Tembo of $838million.
A totalof 16.76 million Tembo Dividend Shares, representing 20% of the 83.8million shares, will be distributed to Vivo Power shareholders, whowill receive 5 Tembo Group shares for each VivoPower share held. Thefinal merger agreement and independent fairness opinion will befinalized in May, with the merger targeted for completion by August2024. According to its most recent quarterly filing, CCTS has $25million in cash on its balance sheet.
This deal would be massively beneficial to VivoPower International (NASDAQ:VVPR) shareholders. Since thetransaction was announced, VivoPower’s trading volume has surged,topping 120 million shares, eclipsing its daily average of about45,100 shares and its previous one-day record of 11.05 million shares.
This is in spiteof the company having a low float of only 1.4 million shares.
Going forward,VivoPower appears to still have more room for significant upside,considering its stock is still undervalued relative to the deal itjust announced. Here’s a quick summary of why VivoPower shares areprimed for further major upside.
-
Shareholders get5 Tembo shares worth $10 each for every Vivo shareheld.
-
Taking a veryconservative scenario, 10% of $838 million would add at least $83.8million in market cap for VivoPower.
-
VivoPower has about 3.3 million shares outstanding, which wouldtranslate into a share price of roughly $25 per share.
-
At $1 per dividend share, that wouldtranslate to an additional $5 per share held for VivoPowershareholders.
-
That means thatVivoPower could see its market cap conservatively increase by at leastanother 4x on the back of this deal alone.
-
If Tembo shares end upat say $6, which is still a 40% discount to the deal price of $10,VivoPower shareholders get approximately $152 of value. Thisrepresents approximately 25 times the current share price.
Essentially, even if the Tembo share price upon IPO is only $1,this implies a per-share valuation for VVPR of $25, including thevalue of dividend shares.
VivoPower’s upside potential is furtherreaffirmed by the fact that it received direct investment in Tembofrom an Emirati-based family office associated with the ruling familyof Dubai at a $120 million pre-money valuation. Based on this, thevalue per share of VVPR should be approximately $40 per share. Thisrepresents 7x the current share price of VVPR.
Just to reiterate, thatcould still be a conservative outcome, as there are analysts whobelieve there's even more upside potential for the company.Finviz, for instance, has a $50 price target for VivoPowerInternational (NASDAQ:VVPR) shares.
During the week, management furtherreaffirmed their commitment to increasing shareholder value after VivoPower International (NASDAQ:VVPR) announced that its Boardof Directors had authorized a capital management strategy including astock buyback program that would allow the company to purchase up to$5 million of its outstanding common stock.
Any share buybackswould be funded using the company’s proceeds from the realization ofbusiness and asset divestitures, including spin-offs like the Caretbusiness unit’s portfolio, representing up to ten solar projectstotaling 586 MW-DC.
Disclaimers:CapitalGainsReport (CGR) is notoperated by a licensed broker, a dealer, or a registered investmentadviser. This content is for informational purposes only and is notintended to be investment advice. The Private Securities LitigationReform Act of 1995 provides investors a safe harbor in regard toforward-looking statements. Any statements that express or involvediscussions with respect to predictions, expectations, beliefs, plans,projections, objectives, goals, assumptions, or future events orperformance are not statements of historical fact may be forwardlooking statements. Forward looking statements are based onexpectations, estimates, and projections at the time the statementsare made that involve a number of risks and uncertainties which couldcause actual results or events to differ materially from thosepresently anticipated. Forward looking statements in this action maybe identified through use of words such as projects, foresee, expects,will, anticipates, estimates, believes, understands, or that bystatements indicating certain actions & quote; may, could, ormight occur. Understand there is no guarantee past performance will beindicative of future results. Investing in micro-cap and growthsecurities is highly speculative and carries an extremely high degreeof risk. It is possible that an investors investment may be lost orimpaired due to the speculative nature of the companies profiled.CapitalGainsReport (CGR) has been retained by VivoPower Internationalto assist in the production and distribution of content related VVPR.'CGR' is responsible for the production and distribution ofthis content. It should be expressly understood that under nocircumstances does any information published herein represent arecommendation to buy or sell a security. This content is forinformational purposes only, you should not construe any suchinformation or other material as legal, tax, investment, financial, orother advice. Nothing contained in this article constitutes asolicitation, recommendation, endorsement, or offer byCapitalGainsReport or any third party service provider to buy or sellany securities or other financial instruments. All content in thisarticle is information of a general nature and does not address thecircumstances of any particular individual or entity. Nothing in thisarticle constitutes professional and/or financial advice, nor does anyinformation in the article constitute a comprehensive or completestatement of the matters discussed or the law relating thereto. CGR isnot a fiduciary by virtue of any persons use of or access to thiscontent.
Contact Details
Mark McKelvie
+1585-301-7700
Copyright (c) 2024 TheNewswire - All rights reserved.