Buy Signal on Alfen (ALFEN-NL)
Alfen is a € 1.6 BN market cap company which is engaged in the production of electric grid equipment. The Company is active in three business lines:
1. Smart Grids, which supplies standardized electricity grid connection systems, secondary transformer substations, local power grids, devices for grid automation, as well as software and back-end systems for remote management and grid control;
2. Energy Storage, responsible for development and installation of modular energy storage systems under the brand TheBattery, which are used by utilities, grid operators, energy traders and industrial companies;
3. Electric Vehicle (EV) Charging, which supplies EV charge points in a variety of capacities and functionalities for use at home, work and in public areas.
Alfen has achieved solid organic growth in 2020 with sales growth of around 32% to €189m and an increase in the EBIT margin to 9.2% (2019: 6%). As for 2021, revenue growth is expected to reach 30%, and to continue at this space in 2022 an 2023. EPS growth is expected to reach 36% this year and 60% in 2022, quickly absorbing the rather high valuation multiples.
Alfen looks like an attractive technology play in the energy transition, as it is profitable, generate cash-flows and is quickly getting closer to a critical size.
Short term catalyst : Strong growth in Energy storage and EV charging.
This signal looks consistent with the bullish reversal in the renewable technology theme.