First Berlin Equity Research has published a research update on PSI SE (ISIN: DE000A0Z1JH9). Analyst Simon Scholes reiterated his BUY rating and maintained his EUR 30.00 price target.

PSI has published preliminary key figures for 2023. Sales climbed 8.9% to €269.9m (2022: €247.9m) while EBIT fell to €5.6m (2022: €20.2m) due mainly to losses relating to the underestimation of man-hours for the Energy Management segment’s Redispatch 2.0 contracts. The order intake rose 17.2% to €296m (2022: €252.6m). ?FY/23 guidance dating back to the profit warning of 21st July was for a 10% rise in both order intake and sales and EBIT of €5m – €7m. Previous guidance in the 2022 annual report also called for a 10% increase in orders and sales, but targeted EBIT of €25m. 9M/23 results showed a 16.1% increase in the order intake driven mainly by the Energy Management segment. However, sales were up only 2.7% and EBIT was €-2.7m. Q4/23 thus showed most of the expected recovery. We believe that sales growth accelerated in the final quarter because during H1/23 and to a decreasing extent in Q3/23 and Q4/23, the workforce at Energy Management expended significant non-revenue generating man-hours on Redispatch 2.0 projects. These projects were completed by the end of 2023. We also gather that Q4/23 profitability benefitted from a jump in license income at Production Management’s largest business, PSI Metals. Demand from PSI’s electricity network customers remains robust and looks set to continue growing rapidly. The combined capacity of new solar and onshore wind installations in Germany climbed 85% to 18.3 GW in 2023 and we expect a further 14% increase to 21.0 GW in 2024. Recent legislation to accelerate permitting processes suggests that growth will remain very strong for at least the remainder of this decade. Meanwhile, PSI Metals continues to benefit from multi-year rollouts of its software by international customers. We expect Production Management’s EBIT margin to have been in the 11-12% range in 2023 and reach 15% later this decade helped by growing App Store sales. We maintain our Buy recommendation at an unchanged price target of €30. Due to the cyberattack on its IT systems on 15 February, PSI will not as previously scheduled release its annual report on 28 March. The date for the release of the annual report has been put back to the end of May ?at the latest.?