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 34.00 price target.

SFC Energy has reported Q1 results and held a conference call. The company presented exceptionally good figures. Sales rose 46% y/y to €40m, the gross profit jumped 75% to almost €18m (gross margin: 45% versus 37% in Q1/23), and adjusted EBITDA was 30% ahead of our forecast at €9m. The adjusted EBITDA margin of 22.5% is nothing less than spectacular. Nevertheless, management is sticking to full-year guidance (adjusted EBITDA of €17.5m to €22.4m) as MEA capacity constraints may limit growth in Q2 and Q3. Furthermore, SFC will spend cash to ramp up MEA production in the UK and fuel cell production in Romania. Although we do not expect SFC to repeat Q1 results, we believe that the company will easily reach our 2024E forecast. SFC remains the top pick in the fuel cell business as it is the only listed player which is not only growing at high speed, but has also reached high profitability (Q1/24 net margin: 13%). Given the eminently defendable competitive advantage in direct methanol fuel cells, we believe that SFC will even improve margins in the coming years. An updated DCF model yields an unchanged €34 price target. We confirm our Buy recommendation.