First Berlin Equity Research has published a research update on ParTec AG (ISIN: DE000A3E5A34). Analyst Simon Scholes reiterated his BUY rating and maintained his EUR 170.00 price target.

Abstract
H1 results exceeded our estimates, with sales 15% above FBe at €10.7m, as revenues from Mare Nostrum V and Jupiter materialized earlier than anticipated (FBe: €9.3m). Stronger sales and a much stronger gross margin than modelled, led to positive EBIT of €3.6m (FBe: €-7.6m). A tax refund on the receivables written down in 2023 brought ParTec’s net income to €5.7m. We expect 2024 to be tail-loaded, with H2 accounting for 86% of total sales. At its AGM on 6 August, ParTec announced a change in its strategy to focus on constructing and operating large AI machines. ParTec plans to act both as an EPC contractor, selling AI machines to private public partnerships, and as an AI Machine operator, constructing AI Machines and selling the computing hours. The company has since signed a memorandum of understanding with the Helmholtz-Zentrum Dresden-Rossendorf for the construction of a large AI supercomputer named ELBJUWEL, to be built and operated by ParTec. We expect a firm contract by the end of the year. We think there is ample demand for large AI machines, which means ELBJUWEL should be the first of a series of large AI machines. The reduction in short-term revenue estimates (2024E-2025E) driven by this strategic shift is compensated by widening gross profit and EBITDA margins from 2026E onwards. We remain buy-rated with an unchanged €170 price target.