Alfen First Look, 1Q23 already hits a speed bump

Last week, Alfen hosted its CMD with positive mid-term growth and gross margin updates by segment. We initiated a week before the CMD with a warning that FY23-24 might experience a speed-bump. The 1Q23 EV charging division already hit a speed bump with a 14% yoy decline. The company refers to strong comparables and also lumpiness in the semi-public project market. The company believes that the EV-charging segment will only recover its growth trajectory over 2H23. The E-storage segment picked up part of the slack, but realises lower gross margins. Alfen now also publishes its gross margins by division, these came in line with our estimates. In future, these details will only be provided on the HY and FY results. Despite the EV charging shortfall, the revenue outlook FY23 EUR 540-600m was maintained, based on 165m backlog for E-storage. The adj. EBITDA margin was also confirmed at a 15-20% range for the medium term. The EV-charging gross margin amounted to 41% over 1Q23, above the mid-point of the 35-45% guidance and could increase over 2H23 as growth recovers.

While the transition investments are crystal clear, we believe that the growth inflection point for Alfen end-markets will come only in FY25. However, Alfen is extremely well financed and is expected to emerge as a market leader in this space. We will adjust our estimates after the 9h00 analyst call, but will maintain our Accumulate and EUR 83.0 target price. We have built in room for non-linear growth reports like today. The share price will react negatively today as the CMD set up positive expectations.