The $40 million in emergency aid to electric snowmobile and watercraft maker Taiga Motors is unlikely to be enough to meet all of the company’s needs, according to a financial analyst.
Investissement Québec and Northern Private Capital will inject $40.15 million into the Montreal company, according to a joint announcement made last week. Their investment consists of 10% secured convertible debentures maturing on March 31, 2028.
However, National Bank Financial analyst Cameron Doerksen thinks the Montreal company will need more funds by the end of the year. “For this reason, we believe that funding poses a risk to the stock,” he comments in a note.
Taiga only delivered 36 personal watercraft in the fourth quarter. Instead, Doersken anticipated deliveries of 75 aircraft. “It demonstrates that there are still challenges with the supply chain. The company still encounters challenges in ramping up production. »
The analyst believes the company will “significantly” lower its production targets for 2023. Rather than the target of 2,500 to 3,000 deliveries, Mr. Doerksen predicts there will be 1,360 in 2023.
In the medium term, Mr. Doerksen is also revising his forecast for 2025 downwards, from 24,600 deliveries to 21,825. He now anticipates earnings before interest, taxes, depreciation and amortization (EBITDA) of 36 million rather than 56 million. As a result, he changes his target price from $5.50 to $2.
Prior to the funding announcement, Taiga claimed its cash had shrunk from 22.8 million at the end of December to 8.3 million at the end of February. Mr. Doerksen adds that Taiga burns between 7 million and 8 million in cash per month.
Taiga is due to release its full fourth quarter results on March 28.
Taiga shares rose 3 cents, or 1.54%, to $1.98 on the Toronto Stock Exchange in the afternoon. In August 2021, the stock was worth $9.68.
