Drone Volt

Despite the better than expected profitability linked to strong cost containment and several one-offs, our DCF has not changed. Our profitability outlook is brighter, as we now expect break-even in the net results by the end of FY24. However, the poor working capital in FY21 due to the rising inventory of finished products has offset the increase in the DCF valuation from our upgraded margins.

There could be some potential upside coming from the success of Aquiline Drones’ IPO (expected this year), as it would provide the US firm with enough cash to execute the existing contracts with Drone Volt, which consist of 400 H2, 200 H10 and 500 H20 for a total potential value of over €10m. In addition, the Linedrone is expected to hit the market this year and, depending on its commercial success, there could be some upside. Our current estimates include the sales of 3 Linedrones.

As mentioned previously, the profitability was better than expected. Opex was roughly flat yoy, despite the tremendous growth in sales. Wages, which account for a third of total opex, even decreased yoy. There have also been a few positive one-offs: a €900k exceptional income linked to the loss of Drone Volt’s previous CEO, a low interest expense due to its successful deleveraging and tax income that made up nearly 50% of the negative EBIT. D&A also stood below our expectations, as the H2 figure amounted to 50% of the figure recognised in H1. All these factors have led to a strong net result of €-1,257m for FY21, far above our estimates. The impact is hardly visible in EPS terms.

The NAV has been negatively impacted due to Drone Volt’s revised cash situation. In our previous estimates, the 50% stake sale in Aerialtronics was received in cash which led to a strong rise in the net cash position. However, the sale was realised through a convertible obligation from Aquiline Drones which is planned to be converted when its IPO is done. Hence, the NAV has been impacted by the difference in cash from this operation. In addition, we had not expected a negative working capital of nearly €-6m, which also contributed to a lower net cash situation at the end of FY21. If Aquiline Drone completes its IPO, the convertible obligation would be converted and Drone Volt’s cash situation could improve rapidly.