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

Drone Volt

CR
Bloomberg   ALDRV FP
Aerosp. & Defence Equipt.  /  France  Web Site   |   Investors Relation
From distributor to service provider.
Target
Upside 125%
Price (€) 0.01
Market Cap (€M) 15.4
Perf. 1W: -1.12%
Perf. 1M: -8.33%
Perf. 3M: -10.2%
Perf Ytd: -12.0%
10 day relative perf. to stoxx600: -2.34%
20 day relative perf. to stoxx600: -9.20%
Earnings/sales releases30/01/2024

New annual sales record and new capital increase

Drone Volt unveiled a promising FY23 trading update but announced a new capital increase to fund its high expected growth. Last year’s performance could have been better without the Chinese restrictions on the sale of drones.


Fact

Sales for FY23 grew by 74% from €13.7m to €23.9m, beating our estimate and guidance of €23m (revised downwards a month ago).
The gross margin for FY23 grew by by 17% from €2.9m to €3.4m, falling short of our expectations of €3.9m.
The company expects strong growth in revenue in Q1 24 and an improvement in the gross margin for the FY 24.
Drone Volt also announced the success of a new capital raising of €2.5m with a price of €0.01 per share, an 18% discount to the stock price of €0.0122 at yesterday’s close. The dilution is 14% for shareholders that did not subscribe to the offer.


Analysis

Distribution still the main contributor
The group managed to deliver 80% of the big distribution contract (representing €16m) as expected due to supply chain tensions. The overperformance lies in the other distribution contracts that were less affected than we had expected with 53 drones sold. Drone Volt Factory, Services and Academy sales are ramping up thanks to the new Drone Volt Expert service, with growth of 20% from €1.7m to €2.0m.
The shortfall in the growth margins stems from a decline in margins for both divisions over the year, but the trend subsequently improved over the year as emphasized by the gross margin improvement to 14% in H2 23 compared to 11% in H1 23 to reach a gross result of €1.6m in H2.

*A promising outlook…
Strong revenue growth will come from delivery of the remaining 20% of the €20m contract before the end of H1 24. The company also expects double-digit growth in 2024 for its high-margin Drone Volt Expert offer. The potential game changer is the new Drone Volt Kobra, that could improve revenue started from H2 24 according to the management and could generate high margins if sold in high numbers due to the relatively fixed cost base.

… funded by another capital raising
The company also announced the success of a new capital increase of €2.5m with a price of €0.01 per share, an 18% discount to the stock price of €0.0122 at yesterday’s close. The dilution amounts to 14% for shareholders that did not subscribe to the offer. The amount raised will be used to recruit new telepilots for its drone as a service offer and to ramp up production capacity for the new Linedrones and Kobra drones.


Impact

We will integrate these elements into our model and this will drive the target price downwards, but we do not expect a change in recommendation.


.