Alfen was focused on charging electric vehicles and is now also working on energy storage with
CATL battery company.
This summer in The Netherlands solar will generate 32 GW on sunny days whilst electricity use is 15 GW. Electricity will be free for hundreds of hours and expensive at other times. The demand for storage is also increasing worldwide. See https://www.tesla.com/ns_videos/Tesla-Master-Plan-Part-3.pdf for the numbers involved in the worldwide energy transition.
Alfen expected to see revenue increase by roughly a quarter in 2024 and Earnings to increase to EUR 100m? by 2027 (they predict EBITDA, not net earnings). That would have been roughly EUR 5 per share. At a multiple of 15 the share price would be EUR 75 an increase of 50% in 4 years.
Things turned out differently. Sales of electric vehicles decreased in 2024 and customers did not order as many batteries as hoped. Aflen booked a loss over 2024.
Alfen Graham Defensive Analysis
SECTOR: [PASS] Alfen is neither a technology nor financial Company, and therefore this methodology is applicable.
SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Alfen's sales of €487 million, based on 2024 sales, pass this test.
CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Alfen's current ratio €251m/€150m of 1.7 just fails the test.
LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for Alfen's is €45m, while the net current assets are €101 million. Aalberts passes this test.
LONG-TERM EPS GROWTH: [PASS] [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Alfen's EPS growth over the past years of > 1 000% passed the EPS growth test until the company booked a loss in 2024.
EARNINGS YIELD: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Alfen's E/P of 0% (using last years earnings) fails this test.
GRAHAM NUMBER VALUE: [FAIL] [PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Alfen's has a Graham number of √(15 x €0,9 EPS x 1,5 x €7 Book Value) = €12.50
Dividend: There is no dividend payment because all proceeds are reinvested in the company.
Conclusion: July 2024: Dip now to EUR 18,- under Graham Value. Growth slower than expected and negative Free Cash Flow. A secondary offering of stock at this price would be a pity. Will the company get the +/- EUR 20 million it lent out last year for building of plant and headquarters back in cash now?
August 2024 EUR 13,12 stock price : February 2025 Not for the Graham Defensive investor, on the other hand the stock seems cheap at EUR 11,85
No comments:
Post a Comment