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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 142%
Price (€) 0.01
Market Cap (€M) 14.4
Benchmarks Current multiplesWeightValues (€)Upside 
DCF (Edit and simulate)  35%0.03235%
NAV/SOTP per share   20%0.02173%
EV/Ebitda Peers 6.9 x 20%0.02100%
P/E Peers 10.7 x 10%0.02100%
Dividend Yield Peers 0.0% 10%0.00-100%
P/Book Peers 0.6 x 5%0.02100%
Target Price  100%0.02142% 
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 32.2 17.0 4.70 0.79
Drone Volt's ratios 10.7 6.85 0.61 0.00
Premium 0.00% 0.00% 0.00% 0.00%
Default comparison based valuation (€) 0.02 0.02 0.02 0.00
IsraelElbit Systems(Consensus) 8,068 25.215.24.740.82
United StatesAerovironment(Consensus) 5,131 62.838.2n/an/a
United StatesIrobot(Consensus) 256 -4.69-22.53.660.00
DCF Valuation Per Share Help View DCF history
WACC % 8.32
PV of cashflow FY1-FY11 €th 15,028
FY11CF €th 5,233
Normalised long-term growth"g" % 2.00
Sustainability "g" % 1.95
Terminal value €th 82,115
PV terminal value €th 36,916
PV terminal value in % of total... % 71.1
Total PV €th 51,945
Avg net debt (cash) at book v... €th -2,014
Provisions €th 106
Unrecognised actuarial losses... €th 0.00
Financial assets at market price €th 208
Minorities interests (fair value) €th 5,976
Equity value €th 48,085
Number of shares Th 1,751,...
Implied equity value per share 0.03
Sustainability impact on DCF % -0.60
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 14,349
Net debt (cash) at book value €th -1,793
Net debt (cash) at market value €th -1,793
Company debt spread bp 500
Marginal Company cost of debt % 8.50
Company beta (leveraged) x 0.87
Company gearing at market v... % -12.5
Company market gearing % -14.3
Required return on geared eq... % 7.87
Cost of debt % 6.38
Cost of ungeared equity % 8.32
WACC % 8.32
DCF Calculation Help
  12/22A 12/23E 12/24E 12/25E Growth 12/26E
Sales €th   13,736 23,865 29,050 35,736 8.00% 38,595   
EBITDA €th   -2,799 -2,810 536 5,016 8.00% 5,418   
EBITDA Margin %   -20.4 -11.8 1.84 14.0 14.0   
Change in WCR €th   -508 -861 1,139 1,221 7.00% 1,307   
Total operating cash flows (pre tax) €th   -112 -3,571 1,775 6,337 6,724   
Corporate tax €th   -4,174 876 351 -694 7.00% -743   
Net tax shield €th   -27.0 -53.7 -50.4 -54.3 7.00% -58.1   
Capital expenditure €th   -3,350 -4,000 -3,960 -3,920 3.00% -4,038   
Capex/Sales %   -24.4 -16.8 -13.6 -11.0 -10.5   
Pre financing costs FCF (for DCF purposes) €th   -7,663 -6,749 -1,884 1,668 1,885   
Various add backs (incl. R&D, etc.) for DCF... €th     
Free cash flow adjusted €th   -7,663 -6,749 -1,884 1,668 1,885   
Discounted free cash flows €th   -7,663 -6,749 -1,740 1,422 1,483   
Invested capital   10.8 12.0 11.3 10.6 11.0   
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 0.01 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 -3,597 0.00 -8.41%
Commitments to pay
Commitments received
NAV/SOTP 39,164 0.02 91.6%
Number of shares net of treasury shares - year end (Th) 1,751,001
NAV/SOTP per share (€) 0.02
Current discount to NAV/SOTP (%) 63.3 View history

Changes to Story : 29/01/2024, Changes to Forecasts : 29/01/2024.