Following recent corporate events, we believe the market is familiar with the Paragon AG (DE:PGNG) growth story. Based on 9M17 results, both Paragon and its 60%-owned subsidiary Voltabox (DE:VBX) are on track to achieve management’s FY17 guidance. Adjusting for Voltabox, Paragon’s implied FY17e EV/sales multiple of 0.93x for the electronics and mechanics segments is comparable to peers. Our revenue and earnings estimates are largely unchanged and broadly in line with consensus as we wait for more details on the potential entrance to the autonomous driving market. We have adjusted our DCF valuation from €82.1/share to €86.4/share mainly to reflect the recently completed IPO of Voltabox.
9M17 results: On track to meet FY17 guidance
Paragon reported 9M17 revenues of €84.5m (up 15% y-o-y), EBIT of €6.1m (up 20% y-o-y) and EPS of €0.49 (up 139% y-o-y). Management reiterated its FY17 revenue guidance of €120-125m and EBIT margin of 9.0-9.5% (including an uplift from Voltabox’s maiden EBIT profit). We assume that at the end of October 2017 Voltabox had net cash of €130m and Paragon, on a standalone basis, had net debt of €37m, implying a consolidated net cash position of c €93m.
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