First Berlin – SFC Energy AG Research Update (12/02/2018)

First Berlin Equity Research has published a research update on SFC Energy AG (ISIN: DE0007568578). Analyst Dr. Karsten von Blumenthal reiterated his ADD rating and increased the price target from EUR 7.70 to EUR 8.70.

On 8 February, SFC Energy presented preliminary 2017 figures which were above our forecast. Annual sales reached a record high at €54.3m (+23% y/y). Adjusted EBITDA was clearly positive at €1.5m (2016: €-2.7m). Strong demand from security & industry and oil & gas markets for SFC's products were the main revenue drivers. Strict cost control supported the earnings turnaround. A high oil price and continuing strong demand from defence customers look set to be the growth drivers for 2018E. This is supported by a significantly increased order backlog at the end of 2017 (€18.6m, +10% y/y). We forecast sales growth of 18% and EBIT of €2.5m for 2018E. Given SFC's strong competitive position in the markets for reliable and clean off-grid power solutions, we expect sustainable growth and increasing profitability in coming years. We increase our price target to €8.70 (previously: €7.70) and reiterate the Add rating.