DCF
To date, very few drone companies have managed to sustain the supposed growth rate of the market (+10%). We therefore apply a more conservative growth rate in our DCF going forward, namely 8% growth over 2028-35. The wider commercialisation of the LineDrone and Kobra could push this estimate upwards. Thanks to cost containment measures, positive volume effects and a transition to services rather than products, we believe that a long-term EBITDA growth of 8% is achievable.
NAV
For the NAV, in order to reflect the nominally strong growth potential and to compensate for the still early stage of the company, with high volatility in profitability, we have chosen to base our valuation on sales multiples. We value the company through its different segments, based on three-year average forecast sales, to which we apply a multiple. We value Distribution at 0.9x its estimated three-year average sales. This multiple is in line with similar distribution activities of European companies, taking into account the limited value-added and growth prospects. For Drone Volt Factory, we value the factory (corresponding to drone and camera sales, as well as services) and training, based on the current trading multiples compiled on Bloomberg for the competitors, i.e. c.6x revenues. In addition, we value the emerging activity of Drone as a Service separately at 6x, given the high growth and margins.
Peers
With regard to peers, finding a similar company to Drone Volt is quite challenging as there is currently no perfect match in our coverage, nor on the listed market. We, however, address this issue by valuing Drone Volt in line with the relevant players of the drone industry, such as Elbit Systems, Exail Technologies and Aerovironment.
The target price has suffered from the different capital increases carried out to support the high growth rates of the company, as well as lower margins in its big distribution contracts.
