First Berlin – 2G Energy AG Research Update (04/12/2017)

First Berlin Equity Research has published a research update on 2G Energy AG (ISIN: DE000A0HL8N9). Analyst Dr. Karsten von Blumenthal upgraded the stock to BUY but decreased the price target from EUR 24.60 to EUR 24.00.

2G Energy reported 9M figures that slightly exceeded our estimates. The company posted a significant increase in revenue of 19% y/y to €111m and reached marginally positive EBIT of €0.5m. 2G confirmed its revenue guidance of €174-180m and narrowed down its EBIT margin guidance to 3.0%-3.5% (previously: 3.0%-5.0%). Given that Q4 is traditionally the quarter with the highest revenue and margins, we assume the company will reach its targets. The increased and strong order book of €133m supports our growth forecast for 2018E. We reduce our EBIT estimate for the current year and the following years as margins are recovering at a slower pace than anticipated. We now expect 2G to reach the upper end of the new EBIT margin guidance. An updated DCF model results in a new price target of €24.00 (previously: €24.60). We upgrade the stock from Add to Buy.