First Berlin Equity Research has published a research update on SFC Energy AG (ISIN: DE0007568578). Analyst Dr. Karsten von Blumenthal reiterated his BUY rating and maintained his EUR 31.00 price target.

Abstract
SFC Energy has published its annual report and held a conference call. Final 2024 KPIs confirmed preliminary figures and reflect the very strong 2024 performance. 23% top line growth to €145m and EBIT growth of 50% y/y to €13.7m led to EBIT margin expansion from 7.8% to 9.5%. SFC confirmed 2025 guidance (11% to 25% revenue growth, adjusted EBIT margin expansion to a range between 10.9% and 11.4% versus 10.7% in 2024). Order backlog reached a record level at €105m (+29% y/y). The tense global geopolitical situation was the key driver for the 60% increase in defence sales. We expect continued robust growth in defence demand following the exemption of defence spending from the debt brake in Germany and increasing defence budgets in many other European countries. Technological change in the surveillance service industry towards CCTV systems (which often use SFC’s fuel cells) is another key driver. The third driver is rising demand from the oil & gas industry following Trump’s pro-oil policy. Furthermore, SFC looks set to benefit from the German €500bn infrastructure fund as the company provides critical energy infrastructure. SFC has sufficient financial leeway to finance organic and external growth (net cash position: €42m). Despite robust growth, the company was free cash flow positive in 2024 (FCF: €+5.3m). SFC is in excellent shape and remains the undisputed global market leader in direct methanol fuel cells. An updated DCF model yields an unchanged €31 price target. The stock remains a clear Buy.