Alfen Highway to EV-Heaven, no stop sign, but speed limit till 2025
On 10th of May, Alfen will host its CMD and a week later publish its 1Q23 trading update. The CMD will probably focus on the LT growth outlook for the next 5 years. While the urgency of energy transition investments are crystal clear, we believe that the growth inflection point for Alfen end-markets will come only in FY25. Hence, we initiate with sales expectations below current consensus for FY23-24. However, Alfen is extremely well financed and is expected to emerge as a market leader in this space. We believe it can defend its market share in its core markets and maintain a relatively high EBIT margin. We are unfazed by recent share price corrections in some pure-plays like NHOA (Not Rated) and Chargepoint (Not Rated). We initiate with an Accumulate and EUR 83.0 target price./
Main Assumptions FY23-25 :
Sales growth will slow down to average 20%, but FY24 only 7%
Energy Transition slows due to policy delays and interest rates
Gross margin recovers to 36%, on supply chain improvement
EBIT margin can improve to 17% on scale effect and added-value
Working capital can halve in % on sales as inventory normalises
Capex remains relatively high at 5-6% on sales on R&D investments
Cash position increases to 200m EUR by FY25, for M&A or dividend
Alfen NV (Alfen) is a company based in the Netherlands, engaged in the design, development and production of electric grid equipment. The Company is active in three business lines: Smart Grids, which supplies standardized electricity grid connection systems, secondary transformer substations, local power grids, devices for grid automation, as well as software and back-end systems for remote management and grid control; Energy Storage, responsible for development and installation of modular energy storage systems under the brand TheBattery, which are used by utilities, grid operators, energy traders and industrial companies, among others, and Electric Vehicle (EV) Charging, which supplies EV charge points in a variety of capacities and functionalities for use at home, work and in public areas. In addition, Alfen offers service, management and maintenance activities, including remote support and monitoring, as well as an in-house technological know-how center.
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