First Berlin – 2G Energy AG Research Update (14/05/2019)

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 maintained his EUR 38.00 price target.

2G Energy reported final figures for 2018, which matched the preliminaries. With record revenues of €210m and a significantly higher EBIT margin of 5.5% (2017: 3.9%), 2018 was a very successful year for 2G. We are convinced that 2G will be even more successful in the current year and forecast sales of €229m with an EBIT margin of 6.8%. Management proposes to increase the dividend to €0.45 per share (2017: €0.42). A strong balance sheet and a high order backlog are supportive of further growth. Demand for 2G's CHP plants should remain robust in the medium term as well. This is supported by the phasing out of nuclear power and coal in Germany which will significantly increase demand for new base load capacity. Internationally, we also see a high economic incentive for the use of CHP systems in many markets due to the high spark spread (relatively high electricity prices at fairly low natural gas prices). Despite the strong share price rise in recent months, we see further upside and confirm our Add recommendation and €38 target price.