INIO: Initiating at Sector Perform, $39 PT

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INIO: Initiating at Sector Perform, $39 PT

Innio NV

Investment Thesis

Initiating coverage with a $39 price target and Sector Perform rating. INIO is a distributed

energy solutions provider with a portfolio of reciprocating gas engines focused on serving a

wide array of critical infrastructure, including the grid, datacenters and industrial applications.

The solution portfolio is fully focused on gaseous fuels rather than diesel-based solutions and

the company’s differentiated engine capacity is optimized for ease of shipping and speed to

deployment. This gives INIO a time to power advantage, which is a key differentiator vs

alternative solutions. We believe the company is well positioned to capitalize on continued

growth in demand for baseload power but fear the market could evolve into an oversupplied

situation in the next few years as industry rapidly scales capacity. This poses risks due to

competitive dynamics, and while we believe INIO is well positioned, we worry this could limit

valuation multiple accretion.

Differentiated capacity size addresses power demand gap. The Jenbacher Type 6 engine

delivers up to ~5 MW of peak power and is currently the only vendor with a high speed engine

with this capacity. This size class is unique in that it’s small enough to efficiently transport, but

not too small that it becomes overly burdensome and cost ineffective. Smaller engine variants

not only require more power generation units to achieve the same capacity but also additional

balance of plant equipment like silencers, emission scrubbers (SCRs), circuit breakers,

containers, etc. and this can result in lower power density and higher cost ($/kW). Ease of

transport has meaningful benefits from a speed of deployment perspective and Jenbacher can