AlphaValue Corporate Services Fundamental Analysis FR
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AlphaValue Corporate Services
This research has been commissioned and paid for by the company and is deemed to constitute an acceptable minor non-monetary benefit as defined in MiFID II

Dolfines

CR
Bloomberg   ALDOL FP
Engineering-Heavy Constr.  /  France  Web Site   |   Investors Relation
Activity recovers in oil & gas
Target
Upside 28.4%
Price (€) 0.42
Market Cap (€M) 7.96
Benchmarks Current multiplesWeightValues (€)Upside 
DCF (Edit and simulate)  35%0.87109%
NAV/SOTP per share   20%0.99139%
EV/Ebitda Peers -22.4 x 20%0.00-100%
P/E Peers -11.3 x 10%0.21-50%
Dividend Yield Peers 0.0% 10%0.00-100%
P/Book Peers 8.9 x 5%0.21-50%
Target Price  100%0.5328% 
Valuation matters
Oil & Gas

We expect 2020 to be the nadir in activity, yet maintain a cautious stance as oil prices below $50 weigh on investment spending.
We expect the Solutions and Contracting divisions to win c. €200k of awards from 2020 to 2022. Dolfines has expertise that can be applied early in the cycle, such as technical refurbishment, yet offshore drilling remains subdued.
The DCF is based on a 3% EBITDA growth for the oil and gas activities.

New Energies

We have decided to isolate the New Energies division and show the sum of its discounted cash flows in 2021. This gives more clarity on the contributions of both the Oil and Gas and New Energies divisions and allows for a more suitable modelling of start-up projects. For the offshore wind project, we use a 8% cost of debt and a relatively conservative 10% WACC. We have considered a first pilot project of a 4MW design in 2021, followed by an order of six 6MW units in 2022. The 2024+ designs should all be 12MW turbines. We estimate the revenue for the three designs to be €7.5m, €10m and €12m, respectively. We have also assumed maintenance revenues of €200k per year per float, at similar EBITDA margins, i.e. 10%. For capex estimates, we have used an average capex per employee per year of €12k, corresponding to software licences mainly. From 2033 onwards, we have applied a conservative long-term EBITDA and capex growth rate of 2%.

Key DCF metrics for selected years

Sum of the parts

Our sum of the parts valuation is based on multiples from comparable companies in each business line. Although Dolfines operates in oil and gas services, two divisions are support services functions and should be valued as such.

For the Services and Factorig divisions, we have applied multiples of 4x and 9x to 2023 EBIT, in line with its peers specialised in human resources and support services (Randstad, Adecco) and in inspection, testing and certification (Bureau Veritas, SGS, Eurofins Scientific), with a discount on the cyclicality of the oil and gas sector.

For the Contracting and Services divisions, we have applied a multiple of 5x to 2023 EBIT, using a discount to engineering companies operating in the energy field (Elecnor, TechnipFMC) in order to reflect the risks inherent to a smaller company.

For the NAV of the New Energies division, we value the floating offshore wind division using a DCF method as applying a multiple on EBIT or EBITDA would require to arbitrary select a reference year and therefore be dependent on a still uncertain timing. As a reminder, we use a 8% cost of debt and a relatively conservative 10% WACC.

Comparison Based Valuation
Computed on 18 month forecastsMcap (€M]P/E (x)Ev/Ebitda (x)P/Book (x)Yield(%)
Peers ratios ns 6.03 0.99 1.10
Dolfines's ratios -11.3 -22.4 8.94 0.00
Premium 30.0% 30.0% 30.0% 0.00%
Default comparison based valuation (€) 0.21 0.00 0.21 0.00
TechnipFMC 2,575 ns4.670.681.55
Nordex SE 2,151 ns7.441.910.00
Saipem 2,019 -11.87.970.970.50
Elecnor 879 8.334.261.193.95
DCF Valuation Per Share Help View DCF history
WACC % 8.93
PV of cashflow FY1-FY11 €th 23,458
FY11CF €th 443
Normalised long-term growth"g" % 2.00
Sustainability "g" % 1.60
Terminal value €th 6,052
PV terminal value €th 2,574
PV terminal value in % of total... % 9.89
Total PV €th 26,032
Avg net debt (cash) at book v... €th 2,219
Provisions €th 189
Unrecognised actuarial losses... €th 0.00
Financial assets at market price €th 0.00
Minorities interests (fair value) €th 0.00
Equity value €th 23,623
Number of shares Th 27,206
Implied equity value per share 0.87
Sustainability impact on DCF % -0.63
Assessing The Cost Of Capital Help
Synthetic default risk free rate % 3.50
Target equity risk premium % 5.00
Tax advantage of debt financ... % 30.0
Average debt maturity Year 5
Sector asset beta x 1.05
Debt beta x 1.40
Market capitalisation €th 7,961
Net debt (cash) at book value €th 1,768
Net debt (cash) at market value €th 752
Company debt spread bp 700
Marginal Company cost of debt % 10.5
Company beta (leveraged) x 1.11
Company gearing at market v... % 22.2
Company market gearing % 18.2
Required return on geared eq... % 9.07
Cost of debt % 7.35
Cost of ungeared equity % 8.73
WACC % 8.93
DCF Calculation Help
  12/20A 12/21E 12/22E 12/23E 12/24E
Sales €th   2,525 6,030 7,273 8,307 10,182   
EBITDA €th   -1,827 -917 -416 -444 917   
EBITDA Margin %   -72.4 -15.2 -5.72 -5.35 9.01   
Change in WCR €th   0.00 -200 0.00 0.00 0.00   
Total operating cash flows (pre tax) €th   -1,815 -1,117 -416 -444 917   
Corporate tax €th   -11.8 0.00 0.00 0.00 -180   
Net tax shield €th   -21.5 -57.2 -57.2 -57.2 -57.2   
Capital expenditure €th   -300 -300 -300 -300 -350   
Capex/Sales %   -11.9 -4.98 -4.12 -3.61 -3.44   
Pre financing costs FCF (for DCF purposes) €th   -2,149 -1,475 -773 -801 330   
Various add backs (incl. R&D, etc.) for DCF... €th   25,155   
Free cash flow adjusted €th   -2,149 -1,475 24,382 -801 330   
Discounted free cash flows €th   -2,149 -1,475 22,384 -675 256   
Invested capital   3.84 4.07 4.08 4.08 4.11   
NAV/SOTP Calculation
 % ownedValuation technique Multiple used Valuation at 100%
(€th)
Stake
valuation
(€th)
In currency per share
(€)
% of gross assets
Dietswell New En... 100% DCF 25,160 25,160 0.92 84.3%
Dietswell Factorig 100% EV/EBIT 8.5 2,800 2,800 0.10 9.38%
8.2 France 100% AlphaValue valuation 1,000 1,000 0.04 3.35%
Dietswell Solutions 100% EV/EBIT 5 500 500 0.02 1.67%
Dietswell Services 100% EV/EBIT 4 400 400 0.01 1.34%
Dietswell Contrac... 100% EV/EBIT 5 0.00 0.00 0.00 0.00%
Other
Total gross assets 29,860 1.10 100%
Net cash/(debt) by year end -2,671 -0.10 -8.94%
Commitments to pay -150 -0.01 -0.50%
Commitments received
NAV/SOTP 27,039 0.99 90.6%
Number of shares net of treasury shares - year end (Th) 27,206
NAV/SOTP per share (€) 0.99
Current discount to NAV/SOTP (%) 58.2 View history

Changes to Story : 22/12/2021, Changes to Forecasts : 22/12/2021.