ASTA Energy Solutions AG : Copper-bottomed growth profile

We are initiating coverage on ASTA Energy Solutions AG’s (ASTA) with an Outperform rating and a target price of € 49. ASTA was floated at the end of January (Frankfurt Prime Standard) and will be using the proceeds from the IPO to finance its production capacity expansion (brownfield) in dynamic global utility transformer markets with high growth rates (CAGR of about 6-9%). We consider ASTA as an earnings growth case (EBITDA CAGR 2024-2029e of 20.3%). With gross proceeds of € 125m, the company largely improves its financial structure (doubling the equity ratio to more than 40%). Investors can expect net sales to grow by 7.7% p.a. on average until 2029e and an increase of the EBITDA margin from 5.5% in 2024 to 9.6% in 2029e (margin of 39.7% in 2029e measured relative to so-called net value sales, i.e. reflecting ASTA’s own value generation). Our target price is derived from DCF and peer group analysis.