Alfen Model and Valuation Update
Alfen reported strong 3Q23 results against lowered expectations in the market. We adjust our 2023 estimates upwards. Furthermore, we increase the outlook for Smart Grid and Energy Storage, while we reduce our outlook for EV Charging. Within the segments gross profit margins increase, yet due to the overall product mix, we expect slightly lower Gross Profit margins in the near future. Thanks to the developments and structural improvements the margin outlook improves over the long run. However, this effect is offset by our updated valuation metrics as we perceive more business risk and share price volatility. Our WACC increases from 7.5% to 8.5% with an unchanged long term growth rate of 2%. These changes result in a DCF based valuation of € 58 per share (vs. 60), Accumulate rating maintained.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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