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Velan Inc. SV (TSE:VLN)
TSX:VLN
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Velan Inc. SV (VLN) AI Stock Analysis

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TSE:VLN

Velan Inc. SV

(TSX:VLN)

Rating:47Neutral
Price Target:
C$14.50
▼(-3.07%Downside)
Velan Inc. faces ongoing financial and valuation challenges, with declining profitability and a negative P/E ratio being significant concerns. Technical indicators show a lack of strong momentum, contributing to a cautious outlook. While corporate events indicate positive strategic moves, they do not sufficiently outweigh fundamental weaknesses.

Velan Inc. SV (VLN) vs. iShares MSCI Canada ETF (EWC)

Velan Inc. SV Business Overview & Revenue Model

Company DescriptionVelan Inc. SV (VLN) is a leading industrial manufacturer specializing in the design and production of a wide range of valves for various applications. With a strong presence in the industrial sector, Velan Inc. serves industries such as oil and gas, power generation, chemical processing, and water treatment. The company's core products include gate, globe, check, ball, butterfly, and engineered severe service valves, which are renowned for their durability and reliability in critical service environments.
How the Company Makes MoneyVelan Inc. generates revenue primarily through the sale of its valve products to a diverse clientele across multiple industries. The company's revenue model is based on direct sales to industrial customers, as well as distribution through a network of authorized dealers and distributors. Key revenue streams include the sale of standard and custom-engineered valve solutions, aftermarket services such as maintenance and repair, and long-term contracts with major industrial operators. Significant partnerships with engineering, procurement, and construction (EPC) firms, as well as strategic alliances with global distributors, also contribute to Velan Inc.'s earnings by expanding its market reach and enhancing its service offerings.

Velan Inc. SV Earnings Call Summary

Earnings Call Date:Jul 10, 2025
(Q3-2025)
|
% Change Since: 7.09%|
Next Earnings Date:Oct 09, 2025
Earnings Call Sentiment Positive
The earnings call presented strong sales growth, improved profitability, and strategic initiatives to unlock value. However, it also highlighted significant restructuring expenses and a reported loss from continuing operations. Despite these challenges, the positive developments appear to outweigh the negatives.
Q3-2025 Updates
Positive Updates
Strong Sales Growth
Sales from continuing operations grew more than 18% year-over-year, reaching $73.4 million, driven by increased shipments from activities in Italy and China.
Significant Improvement in Profitability
Adjusted net income from continuing operations was $8.5 million compared to a $7 million loss a year ago, with gross profit rising to $28.3 million from $8.2 million last year.
Strategic Initiatives Announced
Divestiture of asbestos-related liabilities and negotiations for the sale of French subsidiaries, expected to unlock significant value and improve financial stability.
Strong Order Backlog
Order backlog reached nearly $300 million, up 5.3% since the beginning of the fiscal year, with 83% deliverable within the next 12 months.
Cash Flow and Financial Position
Significant cash flow from operations of nearly $20 million after 9 months, with a solid cash balance of $35.1 million and reinstated dividend payment.
Negative Updates
Restructuring Expenses
Restructuring expenses of $74.5 million for the quarter and $81.3 million year-to-date, primarily due to asbestos-related provisions.
Loss from Continuing Operations
A reported loss from continuing operations of $47.8 million for the quarter and $50.6 million for the first 9 months.
Slight Reduction in Bookings
Bookings totaled $59.1 million versus $60.1 million last year, with delays in large projects targeted by Italian operations.
Company Guidance
During the Q3 2025 earnings call for VLN.TO, the company discussed several key metrics and strategic initiatives aimed at enhancing shareholder value and improving financial stability. Velan reported a robust performance, with sales from continuing operations rising by over 18% and achieving an adjusted net income of $8.5 million from a $7 million loss the previous year. The company also generated nearly $20 million in cash flow from operations over nine months, reflecting improved cash generation strategies. Velan's order backlog reached nearly $300 million, with over 83% expected to be delivered within 12 months. Two major strategic initiatives were highlighted: the divestiture of asbestos-related liabilities and exclusive negotiations for selling French subsidiaries, expected to yield significant cash proceeds and streamline operations. The company maintained a solid financial position with $35.1 million in cash and equivalents and reinstated its dividend, emphasizing its commitment to maximizing profitable growth and shareholder returns.

Velan Inc. SV Financial Statement Overview

Summary
Velan Inc. SV faces challenges in revenue growth and profitability, as shown by declining margins and negative net income. While the balance sheet shows reduced leverage, the company's financial stability is weakened by lower equity. Cash flow improvements are a positive sign, yet overall performance is hindered by inconsistent financial metrics and operational challenges.
Income Statement
40
Negative
Velan Inc. SV has faced declining revenues over recent years, with a drop from $411 million in 2022 to $295 million in 2025. The gross profit margin has decreased from 32.8% in 2022 to 28.8% in 2025. EBIT and EBITDA margins have significantly declined, indicating operational challenges. The net profit margin is negative, highlighting ongoing profitability issues.
Balance Sheet
55
Neutral
The company's debt-to-equity ratio has improved due to reduced total debt and lower stockholders' equity, suggesting less leverage. However, the equity ratio has decreased, indicating reduced financial stability. Return on Equity (ROE) is negative, reflecting the company's ongoing net losses.
Cash Flow
60
Neutral
Free cash flow has turned positive in 2025, improving from negative figures in previous years. The operating cash flow to net income ratio is positive, suggesting some operational efficiency despite net losses. However, fluctuations in free cash flow growth rate pose a risk.
BreakdownMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue295.20M346.82M370.43M411.24M302.06M
Gross Profit84.92M93.21M112.47M134.97M80.54M
EBITDA-72.80M5.64M-34.65M50.61M11.83M
Net Income-75.50M-19.74M-55.46M-10.26M2.20M
Balance Sheet
Total Assets501.97M479.39M477.86M508.43M580.83M
Cash, Cash Equivalents and Short-Term Investments35.23M41.72M50.55M62.74M74.97M
Total Debt24.88M41.42M40.91M44.02M84.05M
Total Liabilities403.23M296.13M277.02M242.92M280.61M
Stockholders Equity97.86M182.18M199.89M264.82M297.08M
Cash Flow
Free Cash Flow15.85M-4.94M-6.07M9.25M-20.00M
Operating Cash Flow26.52M4.30M522.00K17.87M-9.10M
Investing Cash Flow-10.28M-14.13M1.76M-26.00K2.90M
Financing Cash Flow-9.81M-4.66M-2.62M-23.52M33.10M

Velan Inc. SV Technical Analysis

Technical Analysis Sentiment
Positive
Last Price14.96
Price Trends
50DMA
14.66
Positive
100DMA
14.99
Positive
200DMA
13.67
Positive
Market Momentum
MACD
0.18
Negative
RSI
55.33
Neutral
STOCH
80.16
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:VLN, the sentiment is Positive. The current price of 14.96 is above the 20-day moving average (MA) of 14.60, above the 50-day MA of 14.66, and above the 200-day MA of 13.67, indicating a bullish trend. The MACD of 0.18 indicates Negative momentum. The RSI at 55.33 is Neutral, neither overbought nor oversold. The STOCH value of 80.16 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:VLN.

Velan Inc. SV Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
65
Neutral
$11.14B15.765.26%2.01%3.16%-25.01%
60
Neutral
C$49.49M404.55-10.19%89.54%
59
Neutral
C$20.38M-7.92%-12.65%-838.74%
58
Neutral
$872.51M-37.81%-29.66%-67.02%
49
Neutral
C$68.69M-1898.77%408.78%-20.74%
47
Neutral
C$324.00M-26.06%0.01%-5.20%-658.62%
39
Underperform
C$76.80M-5701.32%14.45%76.75%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:VLN
Velan Inc. SV
14.96
9.11
155.73%
TSE:BLDP
Ballard Power Systems
2.82
-0.29
-9.32%
TSE:PYR
PyroGenesis Canada
0.40
-0.48
-54.55%
TSE:ENW
Enwave Corp
0.44
0.18
69.23%
TSE:REKO
Reko International
3.70
-0.09
-2.37%
TSE:DYA
dynaCERT
0.14
-0.06
-30.00%

Velan Inc. SV Corporate Events

Executive/Board ChangesShareholder Meetings
Velan Inc. Announces Successful Election of Directors
Positive
Jul 11, 2025

Velan Inc. announced the successful election of its director nominees during the Annual Meeting of Shareholders held in Montréal, Québec. The election results showed overwhelming support for the nominees, with all directors receiving over 98% of the votes in favor. This outcome reflects strong shareholder confidence in the company’s leadership and strategic direction, which is crucial for maintaining its competitive position in the industrial valve manufacturing sector.

DividendsBusiness Operations and StrategyFinancial Disclosures
Velan Inc. Reports Robust First Quarter Results and Strategic Financial Positioning
Positive
Jul 10, 2025

Velan Inc. reported a strong first quarter for fiscal 2026, with an 18.6% increase in sales and a significant improvement in gross profit margin. The company achieved a net income of $17.8 million and a consolidated net income of $77.2 million, bolstered by the sale of its French subsidiaries. With cash reserves at a five-year high and a growing backlog, Velan is reassessing its capital allocation strategy to support growth and maximize shareholder returns, reflected in a higher quarterly dividend.

Financial Disclosures
Velan Inc. to Announce Q1 2025 Financial Results
Neutral
Jun 20, 2025

Velan Inc. has announced that it will release its financial results for the first quarter ended May 31, 2025, on July 10, 2025. The company will host an analyst call the following day to discuss these results, providing stakeholders with insights into its financial performance and strategic direction.

M&A TransactionsDividendsBusiness Operations and StrategyFinancial Disclosures
Velan Inc. Strengthens Financial Position with Robust Fiscal 2025 Results
Positive
May 22, 2025

Velan Inc. reported significant improvements in its fiscal 2025 financial results, with a 14.1% increase in sales from continuing operations and a notable rise in gross profit and adjusted EBITDA. The company has strengthened its balance sheet by divesting French assets and asbestos-related liabilities, enhancing its financial position to support long-term growth and strategic acquisitions. The announcement of a special dividend underscores its commitment to shareholder value, while its focus on clean energy markets positions it for continued success.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 12, 2025