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Drone Volt released a mixed Q3 trading update with sales below expectations due to supply tensions in the distribution business although a favourable revenue mix allowed the company to post a significant improvement in profitability. The company looks well on the way to achieving its doubling of sales objective for FY23 underpinned by strong dynamism for its new Drone Volt Expert offer.
Companies: Drone Volt (ALDRV:EPA)DRONE VOLT SA (ALDRV:PAR)
AlphaValue
Drone Volt published yesterday its complete H1 23 results which confirmed the good execution of the big distribution contract of €20m with a European player. Demand for the new “drone as a service” offer is strong and driving higher-margin growth for second half of the year.
TARGET CHANGE CHANGE IN DCF € 0.02 vs 0.04 -29.5% Our DCF, and consequently the target price, will be impacted by a higher capex of €4m against €3.35m previously expected to take into account the efforts on developing the new family of drones. We have significantly revised upwards our estimates after FY23 as well to take into account the new willingness of the company to invest in new drones and technologies, which does not seem to be a one-off in our opinion.
Drone Volt reported strong H1 23 results with a 4-fold increase in sales to €16.2m, underpinned by operational efficiency to deliver the €20m distribution contract. This contract has a dilutive effect on the gross margin, but the gross result still increased by 17% to €1.6m. The outlook for H2 23 is promising with good prospects on higher-margin services offers, leading the company to reiterate its guidance of a doubling in revenues in 2023 compared to 2022.
Drone Volt has announced a €4.9m capital increase, a substantial amount in relation to pre money market cap (€13m). This capital increase went down badly with the market which seems to be missing the point that Drone Volt is entering a convincing growth phase.
TARGET CHANGE CHANGE IN NAV € 0.02 vs 0.04 -43.3% Dilution from the €4.9m capital increase decided by Drone Volt compared to a €13.1m market cap has impacted the NAV per share
Drone Volt has reported its Q1-23 results, which were in line with the Group’s targets. Revenue reached €1.57m, a 10% decrease yoy, the latter being mainly related to the end of billing of Aquiline Drones for their use of DV’s licenses. In early April, Drone Volt completed its initial deliveries for the + €20m order. The 2023 guidance has been reaffirmed, targeting a doubling in the 2022 revenue figure of €13.7m.
NAV CHANGE CHANGE IN NAV € 0.04 vs 0.07 -39.5% The NAV has been negatively impacted due to Drone Volt’s capital increase of €4.7m at the end of March and the €3m raised through earlier equity lines, which have increased the number of shares from 617,582 to 1,103,091. CHANGE IN DCF € 0.04 vs 0.02 +43.0% The DCF has increased, as we have upgraded our 2024 sales forecast from €31.5m to €33m and our 2025 forecast from €35.6m to €41m, as we expect the company's efforts to pay off.
The 2022 earnings were hurt by Drone Volt’s troubled US partner, Aquiline. This led Drone Volt to write down of the related activities and its shareholding for a combined €16m and book a whopping €26m loss. The balance sheet nonetheless remains healthy and the outlook for 2023 is encouraging, with a trading type order of €20m with decent margins. Opportunistic 2022 acquisitions and the launch of new products also bode well.
OPINION CHANGE CHANGE IN OPINION Add vs Buy CHANGE IN EPS 2022 : € (0.05) vs (0.01) ns 2023 : € 0.00 vs (0.01) ns The downgrade to our EPS FY22 reflects the kitchen sinking of the business associated with Aquiline amortization of all receivables, as well as 2/3rd of the Aquiline Drone shares (€1.7m), which led to a net result of -€26m far below our estimates (-€3.4m). Forward looking, our eps forecasts reflect breakeven at the Ebit level from 2024. CHANGE IN NAV € 0.07 vs 0.12 -39.
Drone Volt published another year of record sales to €13.4m (+53%). It could have been much better without the impact from its US partner. Overall activity was driven by the contribution (€1m) of recently-acquired SKYTOOLS.
Drone Volt has published strong revenue figures despite the loss of its licensing contract from Aquiline Drones. Its Distribution activity strongly outperformed our expectations, more than offsetting this headwind. Drone Volt looks well set to reach the €10m milestone, as the costs of participation in various shows are starting to pay off.
H1-22 Model Update TARGET CHANGE CHANGE IN EPS 2022 : € (0.01) vs 0.00 ns 2023 : € (0.01) vs 0.00 ns Drone Volt saw a significant increase in expenses during the first semester, which was a drag on margins. The rise in marketing expenses (especially related to exhibition participations) amounted to €250k. In addition, through the acquisition of Viking Drones, Drone Volt recruited 3 top-notch engineers which have to be paid, leading to a 25% increase in the wage bill. This was combined
Drone Volt has provided its final H1-22 results with an update on their technological progress. The LineDrone is now fully operational and has gained visibility thanks to the numerous shows in which Drone Volt has participated in the past months. After exchanges with potential customers, the French company has realized that demand would be larger if it provided its drone solutions as a service. The current traction is positive, and Q3-22 is expected to be above last year’s level without any cont
The second quarter for Drone Volt has been tough, as its most lucrative activities have stagnated and deliveries to Aquiline Drones have been put on hold. An IPO in this environment seems unlikely, and Drone Volt will have to count on its other customers for growth. Thanks to its technological advances and its new products expected to hit the market by H2 22, we believe there is still room for a strong second half of the year. In addition, SKYTOOLS has strongly performed this quarter, far above
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