First Berlin – 2G Energy AG Research Update (10/09/2021)

First Berlin Equity Research has published a research update on 2G Energy AG (ISIN: DE000A0HL8N9). Analyst Dr. Karsten von Blumenthal reiterated his ADD rating and increased the price target from EUR 109.00 to EUR 111.00.

2G Energy has reported half-year figures and held a conference call. Revenue increased by 25% y/y to €107m - above our forecast of €96m. However, 2G is no longer struggling only with pandemic-related constraints, but since mid-May also with supply chain problems, which is reflected in lower total output (€112m vs. €116m in H1/20). EBIT was at the previous year's level of €2.3m. To mitigate the supply bottlenecks, 2G has launched an extensive procurement programme. Therefore, 2G does not see its annual production target at risk and has confirmed its guidance for 2021 (revenue: €250-€260m, EBIT margin: 6.0%-7.5%). We maintain our forecast for 2021 for the time being, but cannot rule out that the supply chain problems will impact the margin in H2. For 2022, we assume that an abatement of the pandemic in the industrialised countries will lead to a normalisation on the procurement side. The 10% y/y increase in order intake to €105m since the beginning of the year until the end of July shows that demand for CHP solutions continues to pick up. We expect this trend to continue. In Germany in particular, we see great sales potential for 2G's hydrogen-ready gas-based CHP solutions due to the emerging electricity gap caused by the nuclear and coal phase-out. An updated DCF model yields a new price target of €111 (previously: €109). We confirm our Add recommendation.