First Berlin Equity Research has published a research update on 2G Energy AG (ISIN: DE000A0HL8N9). Analyst Dr. Karsten von Blumenthal reiterated his BUY rating and maintained his EUR 34.00 price target.

Since it was founded in 1995, 2G Energy has developed into a leading supplier of combined heat & power (CHP) systems in Germany and has built up a global sales network. It started as a two-man company (Christian Grotholt and Ludger Gausling – 2G) to manufacture cogeneration plants (two types of energy generation, electricity & heat – 2G), and has developed into a very solid, fast-growing, and profitable medium-sized company with over 900 employees. Turnover was still below €30m at the time of the IPO in 2007, but it increased more than twelvefold to €365m by 2023. 2G’s entry into the large heat pump business last year marks another major step in its development from CHP product supplier to energy system solutions provider. The combination of CHP systems and heat pumps (HP) gives further meaning to the term 2G. We believe that now is the ideal time to expand the business model. The company wants to move early to thoroughly prepare for the forthcoming structural growth in the large heat pump sector. This market is primed for rapid expansion, and 2G wants to capitalise on opportunities with a sufficiently broad product range. 2G is also aiming to quickly establish a competitive edge in the market for energy system solutions that combine CHP and HP. The heating market urgently needs to be decarbonised (currently still 80% fossil). 2G’s energy system solutions intelligently combine electricity and heat production and can supply both green electricity and green heat, even during periods when wind and sun are not available as power sources. 2G’s energy system solutions form a distributed backbone technology for the energy transition, which, as we know, must not only be an electricity transition, but also a heat transition and a transport transition in order to achieve the net-zero target set by the German government for 2045. We confirm our Buy recommendation for the 2G share with an unchanged price target of €34.