First Berlin – 2G Energy AG Research Update (19/11/2021)

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 111.00 to EUR 131.00.

2G has published Q3 figures that were significantly below the previous year's numbers in terms of revenue and EBIT, but exceeded our forecasts. 2G is guiding towards Q4/21 revenue at around last year's level of €100m and has confirmed revenue and EBIT guidance for 2021. We thus stick to our 2021 forecast, which implies Q4 revenue of €97m. For 2022, 2G has published revenue guidance for the first time, which is "still cautious" at €260 - €290m. Given the strong increase in the order backlog to €168m (+16% y/y) at the beginning of the fourth quarter, we maintain our revenue forecast for 2022 of €297m, which is slightly above guidance. We expect revenue from plant sales of around €181m and service revenue of €116m. With its highly efficient CHP plants which can run on natural gas, lean gases and hydrogen, we continue to see 2G as a winner in the German and global energy transition. We estimate medium-term sales growth potential (2020-2027 sales CAGR) at over 12%. In the long term, we see a large market for hydrogen CHP plants, which will even out volatility of electricity production from wind and solar power and thus make an important contribution to a secure power supply. The global coal phase-out initiated at the COP26 World Climate Conference and the earlier coal phase-out envisaged by the future German government (ideally by 2030 instead of 2038 at the latest) lead us to increase our forecasts from 2027 onwards. An updated DCF model yields a new price target of €131 (previously: €111). We confirm our Add recommendation.