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Drone Volt

CR
Bloomberg   ALDRV FP
Aerosp. & Defence Equipt.  /  France  Web Site   |   Investors Relation
From a low-margin distributor to a high-margin service provider.
Target
Upside 86.0%
Price (€) 0.01
Market Cap (€M) 13.8
Benchmarks Current multiplesWeightValues (€)Upside 
DCF (Edit and simulate)  35%0.02226%
NAV/SOTP per share   20%0.02183%
EV/Ebitda Peers 51.0 x 20%0.00-100%
P/E Peers -4.4 x 10%0.00-50%
Dividend Yield Peers 0.0% 10%0.00-100%
P/Book Peers 0.6 x 5%0.01100%
Target Price  100%0.0186% 
Valuation matters

DCF
To date, very few drone companies have managed to sustain the supposed growth rate of the market (+15%). We therefore apply a more conservative growth rate in our DCF going forward, namely 8% growth over 2025-30. The wider commercialisation of the LineDrone could push this estimate upwards. Thanks to cost containment measures, positive volume effects and a transition to services rather than products, we believe that 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 1x 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 have fine-tuned our valuation as we split this into three different parts. First, we value the holding of 50% of Aerialtronics separately, but at half the selling price of this 50% stake to Aquiline. Secondly, and in order to bring to the fore Training, which we believe will be a key asset for Drone Volt as regulation is taking more importance, we value this activity on a standalone basis, based on our rolling three-year revenue estimates to which we apply a multiple of 3x (equivalent to a 50% premium over drone companies), accounting for its strong profitability. Thirdly, we value the remaining business of DVF (corresponding to drone and camera sales, as well as services) based on the current trading multiples gathered on Bloomberg for competitors, or c. 2x of their revenue. In addition, we value separately the emerging activity of Drone as a Service.

Peers
With regard to peers, finding a similar company to Drone Volt is quite a pitfall since 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, Irobot and Aerovironment.

The target price has suffered from the cancellation of the upside potential related to the Aquiline contract which has now been cancelled as Aquiline ran short of funding. This impacts all the metrics starting with the FCF. A biggish but low-margin distribution contract will help 2023 cash flows while the long-term projects are taking shape (grid surveillance drones for Hydro Quebec, new winged drone for long distance observation)

Comparison Based Valuation
Computed on 18 month forecastsMcap (€M]P/E (x)Ev/Ebitda (x)P/Book (x)Yield(%)
Peers ratios 25.7 14.7 5.36 0.69
Drone Volt's ratios -4.37 51.0 0.63 0.00
Premium 0.00% 0.00% 0.00% 0.00%
Default comparison based valuation (€) 0.00 0.00 0.01 0.00
IsraelElbit Systems(Consensus) 7,658 20.913.55.450.71
United StatesAerovironment(Consensus) 4,501 53.432.3n/an/a
United StatesIrobot(Consensus) 335 -4.89-25.93.630.00
DCF Valuation Per Share Help View DCF history
WACC % 8.77
PV of cashflow FY1-FY11 €th 18,147
FY11CF €th 5,865
Normalised long-term growth"g" % 2.00
Sustainability "g" % 1.90
Terminal value €th 85,352
PV terminal value €th 36,819
PV terminal value in % of total... % 67.0
Total PV €th 54,966
Avg net debt (cash) at book v... €th 7,138
Provisions €th 336
Unrecognised actuarial losses... €th 0.00
Financial assets at market price €th 177
Minorities interests (fair value) €th 2,704
Equity value €th 44,965
Number of shares Th 2,151,...
Implied equity value per share 0.02
Sustainability impact on DCF % -1.20
Assessing The Cost Of Capital Help
Synthetic default risk free rate % 3.50
Target equity risk premium % 5.00
Tax advantage of debt financ... % 25.0
Average debt maturity Year 5
Sector asset beta x 0.96
Debt beta x 1.00
Market capitalisation €th 13,772
Net debt (cash) at book value €th 6,204
Net debt (cash) at market value €th 5,109
Company debt spread bp 500
Marginal Company cost of debt % 8.50
Company beta (leveraged) x 1.23
Company gearing at market v... % 45.0
Company market gearing % 31.1
Required return on geared eq... % 9.66
Cost of debt % 6.38
Cost of ungeared equity % 8.32
WACC % 8.77
DCF Calculation Help
  12/23A 12/24E 12/25E 12/26E Growth 12/27E
Sales €th   23,993 42,327 46,046 51,019 8.00% 55,100   
EBITDA €th   -2,245 -721 1,423 4,729 8.00% 5,107   
EBITDA Margin %   -9.36 -1.70 3.09 9.27 9.27   
Change in WCR €th   -1,792 -1,931 668 647 7.00% 692   
Total operating cash flows (pre tax) €th   -3,803 -2,552 2,190 5,476 5,799   
Corporate tax €th   -544 -432 -255 29.7 7.00% 31.7   
Net tax shield €th   -52.8 -50.3 -69.5 -85.7 7.00% -91.7   
Capital expenditure €th   -4,351 -3,916 -3,524 -3,172 3.00% -3,267   
Capex/Sales %   -18.1 -9.25 -7.65 -6.22 -5.93   
Pre financing costs FCF (for DCF purposes) €th   -8,751 -6,951 -1,658 2,248 2,472   
Various add backs (incl. R&D, etc.) for DCF... €th     
Free cash flow adjusted €th   -8,751 -6,951 -1,658 2,248 2,472   
Discounted free cash flows €th   -8,751 -6,951 -1,525 1,900 1,921   
Invested capital   13.0 15.5 15.4 15.4 15.9   
NAV/SOTP Calculation
 % ownedValuation technique Multiple used Valuation at 100%
(€th)
Stake
valuation
(€th)
In currency per share
(€)
% of gross assets
Distribution 100% EV/Sales 1 23,620 23,620 0.01 55.2%
Drone Volt Factory 100% EV/Sales 2 10,400 10,400 0.00 24.3%
Aerialtronics 50.0% NAV 7,500 3,750 0.00 8.77%
Training 100% EV/Sales 3 2,400 2,400 0.00 5.61%
Drone as a Service 100% EV/Sales 2 1,130 1,130 0.00 2.64%
Other 1,461 0.00 3.42%
Total gross assets 42,761 0.02 100%
Net cash/(debt) by year end -3,728 0.00 -8.72%
Commitments to pay
Commitments received
NAV/SOTP 39,033 0.02 91.3%
Number of shares net of treasury shares - year end (Th) 2,151,866
NAV/SOTP per share (€) 0.02
Current discount to NAV/SOTP (%) 64.7 View history

Changes to Story : 16/07/2024, Changes to Forecasts : 16/07/2024.