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 decreased the price target from EUR 44.00 to EUR 41.00.
SFC has published its Q1/22 report and held a conference call. In Q1, the order backlog increased significantly q/q to €57.1m (YE21: €30.5m), and the order intake reached €44.3m. Although demand for SFC’s products remained very strong, supply chain hiccups in the Clean Power Management segment resulted in restrained group revenue growth of only 5% y/y to €17.9m, which is 5% below our forecast. The gross margin was burdened by higher material, logistic, and transportation costs and declined from 36.5% to 31.3%. This resulted in lower adjusted EBITDA & EBIT. Given that SFC increased product prices in January and May by 8% and almost 9% respectively, we believe that higher gross margins will return in H2. Despite ongoing supply chain challenges, we expect an improved situation in H2 due to significantly increased inventory, purchase agreements with key suppliers, and the replacement of Asian suppliers by European ones. SFC confirmed 2022 guidance of €75m to €83m in sales (implying annual growth between 17% and 29%), adjusted EBITDA of €6.0m to €9.1m, and adjusted EBIT of €1.6m to €2.9m. We lower our 2022 forecast slightly to account for the weaker than expected Q1 but still see SFC as well on track to reach guidance. An updated DCF model yields a new price target of €41 (previously: €44). We confirm our Buy rating.