Arrival Ordinary Shares 

Arrival Ordinary Shares (NASDAQ: ARVL) operates in the automotive industry and offers zero-emission vehicles through its in-house developed hardware, software, and robotics technologies. The company is transitioning the automotive industry using low CapEx Microfactories, which would help the manufacturers to lower the price of EV vehicles.

Key Updates:

• On March 19, 2021, ARVL was acquired by the CIIG Merger Corp., a blank cheque company which was established for the purpose of the merger, capital stock exchange, asset acquisition, stock purchase etc.
• The combined entity was listed on the Nasdaq Global Select Market with the ticker ‘ARVL’ on March 24, 2021.

H1FY20 Financial Highlights:

• For the first half of FY20, the company reported an operating loss of EUR 28.124 million v/s an operating loss of EUR 17.516 million in the previous corresponding period. The period was marked by higher administrative expenses (EUR 24.159 million v/s EUR 11.567 million in pcp), and an increase in research and development expenses (EUR 4.723 million v/s EUR 3.705 million in pcp).
• Loss before tax stood at EUR 29.338 million, higher from the loss of EUR 18.517 million in pcp, due to a higher finance expense amounting to EUR 2.551 million v/s EUR 1.003 million in pcp.
• Net loss widened to EUR 24.465 million, from EUR 15.635 million in pcp.

Income Statement Highlights (Source: Company Report)

Risk: The company is not generating any revenue as of now, which is leading to a higher accumulated deficit. Delay in the product timeline and failure of the product acceptance by the end user may affect the business prospect.

Stock Recommendation:

The company is catering to the EV industry, which remains extremely attractive considering the current priority towards clean energy for preservation of the environment. The company witnessed a purchase interest for 10,000 electric vehicles from United Parcel Service (UPS). The company is planning to begin public road trials with UK’s First Bus from Q4FY21, while its production for the Arrival Bus might start from H2FY22. Despite this positive news, we are not sure of the company’s operations, and margins as the group is yet to report its revenue. Further, any delay in the product timeline and failure of the product acceptance by the end user may affect the business prospect. Hence, considering these facts, we prefer to remain on the sideline. Hence, we recommend an ‘Avoid’ rating on the stock at the closing price of USD 14.42 on April 14, 2021.

1-Year Price Chart (as on April 14, 2021). Source: Refinitiv (Thomson Reuters)

Qell Acquisition Corp. (NASDAQ: QELL) is a publicly-traded special purpose acquisition company (“SPAC”) seeking to invest in a high-growth business in the next-generation mobility, transportation or sustainable industrial technology sectors.

Key Highlights

• Lilium to merge with Qell Acquisition Corp.: Lilium GmbH ("Lilium"), which has positioned itself to be the global leader in regional electric air mobility, with the development of its electric vertical take-off and landing jet, has entered into a business combination agreement with Qell Acquisition Corp. After completing the transaction, the new company would be called Lilium, and it is anticipated that ordinary shares would be listed on the Nasdaq under the symbol “LILM”. 

• Under legal investigations: Various legal entities are investigating the company regarding possible breaches of fiduciary duties and other violations of law related to Qell’s agreement to merge with Lilium GmbH. 

Financial overview of FY2020

Source: Company

• In FY2020, the Company reported no revenues and posted a loss from operations at USD 373,207. Its G&A expenses stood at USD 343,207, while administrative fees were USD 30,000.

• The group generated a net loss of USD 293,715 in the reported period. 

• As of December 31, 2020, the Company had approximately USD 2.0 million in its operating bank account and hold a working capital of around USD2.3 million. 

Risks associated with investment

The company is recently incorporated with no operating history and no revenues, Moreover, it is facing legal investigations regarding possible breaches of fiduciary duties. 

Stock recommendation 

The company is recently incorporated with no operating history and no revenues. Moreover, recently Lilium GmbH ("Lilium") entered into a business combination agreement with Qell Acquisition Corp. The transaction values the combined company at approximately USD 3.3 billion pro forma equity value at the USD 10.00 per share PIPE price. Furthermore, the company is facing legal investigations regarding possible breaches of fiduciary duties. Hence, with limited information available, we would like to see how the merger transaction pan out. Therefore, based on the above-stated reason and risks associated, we recommend a "Watch" rating on the stock at the closing price of USD 10.08 on April 14, 2021.

Price Chart (as on April 14, 2021). Source: Refinitiv (Thomson Reuters)

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine do not hold interests in any of the securities or other financial products covered on the Kalkine website.