Industrials

Report by the IDEA!

Strategy update and near-term outlook unlikely to inspire investors - the IDEA! would rather have seen ALFEN focus on its EV Charging Equipment and Smart Grid Solutions and to divest its Energy Storage Systems division, arguing this activity is too volatile, strongly impacting on the predictability of earnings. Based on the company’s FY25 outlook projection and assuming an EBITDA margin of 8%, ALFEN targets an EBITDA of roughly EUR 42.5m. Assuming net debt of approx. EUR 90m, the company’s EV amounts to EUR 375m, implying a valuation multiple of close to 9 times. FCF will be limited. Working capital management will be the key to debt reduction.

Industrials

Seen as an EV-smart charging play, additional value can be found in its smart grid solutions and battery storage with sustainable growth in the low 20s at higher margins for a longer time-horizon than modelled by the Street. In the medium term, analysts at Sustainable Investing see margins increasingly accruing to smart grid suppliers and integrators at the expense of turbine and solar OEMs (which are at risk of becoming commoditised amid higher competition from Asian competitors). Alfen's charging / grid expertise (and 100%) free float make it an attractive target for both green utilities and oil companies that are investing in renewables generation.