H1 23: the beginning of the awaited resurrection
H1 23: the beginning of the awaited resurrectionEARNINGS/SALES RELEASES
Drone Volt published yesterday its complete H1 23 results which confirmed the good execution of the big distribution contract of €20m with a European player. Demand for the new “drone as a service” offer is strong and driving higher-margin growth for second half of the year.
FACT
• Sales were slightly lower than expected at €15.9m (which is already more than in FY22 when revenues stood at €13.7m), while the gross margin rose to €1.8m, representing growth of 27% yoy.
• EBIT increased to €-2.5m from €-3.4m thanks to a lower provision amount compared to last year which was due to Aquiline Drone’s woes.
• The company is now financially healthy thanks to the two successful conventional capital increases with cash and cash equivalents of €7.7m compared to €1.3m at the end of 2022. The level of equity increased consequently to €24m compared to €15.8m at the end of 2022.
• Outlook reaffirmed.
ANALYSIS
Reducing losses and recovering financial losses
EBIT grew by only €900k as it is linked to the low margin €20m distribution contract. The company also experienced an increase in staff costs of 27% due to the impact from the integration of new staff following the acquisition of Lorenz and DV Expert.
The better financial health is a plus because the company can buy assets for cheap prices from more distressed or even bankrupt competitors as was the case with Lorenz. Thanks in part to the engineers, the group will unveil in the next few weeks a new drone for military, police and government as they are now forbidden to buy Chinese drones (with DJI representing currently around 70% of global drone market according to Drone Industry Insights). This is clearly good news for the stock as Drone Volt cannot compete head to head with Chinese players such as DJI in normal circumstances and thus offers a new market.
Outlook for H2
Now that the company’s financial health has been restored by two capital increases, the focus will be on finishing the execution of the remaining €8m of the big distribution contract as well as stimulating sales in the higher-added-value services segment. The firm has already announced two important contracts worth several hundred thousand euros in the last three months for its “drone as a service” offer. This new Drone Volt Expert division serves three main purposes with important growth potential: agriculture, topography and inspection. The new family of drones may be the last catalyst for growth in the second half of the year.
The company confirms again its objective of doubling sales in 2023 thanks to the good commercial dynamic for its new service Drone Volt Expert. This higher added-value service should also allow the company to increase its EBIT margin in H2.
IMPACT
Our DCF, and consequently the target price, will be impacted by a higher capex of €4m against €3.35m previously expected to take into account the efforts on developing the new family of drones. We have significantly revised upwards our estimates after FY23 as well to take into account the new willingness of the company to invest in new drones and technologies, which does not seem to be a one-off in our opinion.
Drone Volt SA. Drone Volt SA is a France-based company principally engaged in the aerospace industry. The Company provides civilian drone manufacturing. It specializes in the production, integration and sale of drones for professionals. Drone Volt is a provider of the audiovisual market in the field of aerial photography by drone. The Company is also present in many other markets such as security and topography, among others. The Company's main product is the Pack PRO FOR GH4 S900. It cooperates with Ministry of Internal Affaires, Ministry of Defense, CERN, Gendarmerie Transports Aeriens (aerial transport police), Dakar 2015, Spie, TF1, Bouygues, CNRS, Bonne Pioche, RAID and GEDEON Programmes, among others. It operates through Dandrone.
AlphaValue Corporate Services capitalise on the research and credit analysis expertise deployed by AlphaValue with major institutional investors at European level over the past nine years. The proprietary tools and processes enabling AlphaValue Corporate Services to establish a valuation and/or a credit risk assessment are identical to those used by AlphaValue to the benefit of its institutional clients. The only difference is the recognition that a company evaluation cannot be dissociated from the fact that the latter is paying for the service (AlphaValue Corporate Services), as opposed to the investor footing the bill (AlphaValue). AlphaValue’s research tools are characterised by the transparency of the valuation methodologies, their responsiveness to market data and by nine years’ experience of a universe numbering more than 450 European companies. Through its coverage and sector exhaustiveness, AlphaValue ranks alongside the major research houses in Europe and constitutes the only new entrant to the European space in the past decade. This significant presence is reflected in an unrivalled distribution capability via platforms commonly adopted by investors to access research: Factset, Bloomberg, Capital IQ and the numerous websites. AlphaValue is one the largest research contributors to these platforms, to the benefit of AlphaValue Corporate Services issuer clients. The AlphaValue Corporate Services analysts are AlphaValue’s sector specialists. Their robust knowledge of the business models in their sectors enables the rapid generation of incisive, relevant research and advantageous interaction with the management teams.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.