First Berlin – 2G Energy AG Research Update (14/09/2020)

First Berlin Equity Research has published a research update on 2G Energy AG (ISIN: DE000A0HL8N9). Analyst Dr. Karsten von Blumenthal downgraded the stock to REDUCE but increased the price target from EUR 52.00 to EUR 70.00.

2G has presented first figures for the first half of the year. As expected, the total output increased by almost 8% to €116m. Although sales and EBIT remained below the previous year's figures and our expectations on delayed final invoices due to the pandemic, we see this only as a timing problem. Despite the pandemic, incoming orders rose sharply by 16% to €95m and the order backlog remains at a high level of almost €160m and ensures full capacity utilisation well into the second quarter of 2021. We believe that the pandemic-related restrictions will not have a major impact on 2G's business development. In the medium term, the progress of the energy transition in Germany and the world will be decisive. We see high sales potential here for 2G's distributed CHP systems that can be operated with natural gas, biogas, and hydrogen. We thus increase our medium-term forecasts. An updated DCF model results in a new price target of €70 (previously: €52). After the strong share price increase in recent months, 2G is now highly valued with a 2021E PER of over 24. We downgrade the stock from Add to Reduce.