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Drone Volt

CR
Bloomberg   ALDRV FP
Aerosp. & Defence Equipt.  /  France  Web Site   |   Investors Relation
From distributor to service provider.
Target
Upside 148%
Price (€) 0.01
Market Cap (€M) 13.8
Perf. 1W: 1.28%
Perf. 1M: 2.60%
Perf. 3M: -18.6%
Perf Ytd: -21.0%
10 day relative perf. to stoxx600: 2.58%
20 day relative perf. to stoxx600: 0.21%
Earnings/sales releases18/09/2023

H1 23: the beginning of the awaited resurrection

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.


Fact

• Sales were slightly lower than expected at €15.9m (which is already more than in FY22 when revenues stood at €13.7m), while the gross margin rose to €1.8m, representing growth of 27% yoy.
• EBIT increased to €-2.5m from €-3.4m thanks to a lower provision amount compared to last year which was due to Aquiline Drone’s woes.
• The company is now financially healthy thanks to the two successful conventional capital increases with cash and cash equivalents of €7.7m compared to €1.3m at the end of 2022. The level of equity increased consequently to €24m compared to €15.8m at the end of 2022.
• Outlook reaffirmed.


Analysis

Reducing losses and recovering financial losses
EBIT grew by only €900k as it is linked to the low margin €20m distribution contract. The company also experienced an increase in staff costs of 27% due to the impact from the integration of new staff following the acquisition of Lorenz and DV Expert.

The better financial health is a plus because the company can buy assets for cheap prices from more distressed or even bankrupt competitors as was the case with Lorenz. Thanks in part to the engineers, the group will unveil in the next few weeks a new drone for military, police and government as they are now forbidden to buy Chinese drones (with DJI representing currently around 70% of global drone market according to Drone Industry Insights). This is clearly good news for the stock as Drone Volt cannot compete head to head with Chinese players such as DJI in normal circumstances and thus offers a new market.

Outlook for H2
Now that the company’s financial health has been restored by two capital increases, the focus will be on finishing the execution of the remaining €8m of the big distribution contract as well as stimulating sales in the higher-added-value services segment. The firm has already announced two important contracts worth several hundred thousand euros in the last three months for its “drone as a service” offer. This new Drone Volt Expert division serves three main purposes with important growth potential: agriculture, topography and inspection. The new family of drones may be the last catalyst for growth in the second half of the year.
The company confirms again its objective of doubling sales in 2023 thanks to the good commercial dynamic for its new service Drone Volt Expert. This higher added-value service should also allow the company to increase its EBIT margin in H2.


Impact

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.


Updates

19 Apr 24 Earnings/sales releases
Drone Volt on the move

26 Mar 24 Earnings/sales releases
Drone Volt ready for new growth phase

30 Jan 24 Earnings/sales releases
New annual sales record and new capital incre...

20 Oct 23 Earnings/sales releases
Ambivalent Q3 results

18 Sep 23 Earnings/sales releases
H1 23: the beginning of the awaited resurrection

17 Jul 23 Earnings/sales releases
H1 23: Strong growth backed by Drone Volt’s o...

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