Now that it is clear that Europe has made the political choice of the electric vehicle for its mobility from the next decade, we will have to work hard to adapt the infrastructures. Year after year, car manufacturers and their suppliers began to change. Energetics are also getting involved. But there are few players truly specialized in the collection area that are mature and capable of carrying out complex projects. What makes Alfen a unique company, in more ways than one.
To begin with, it is important to highlight that the Dutch company was created in 1937 and that it was already active in the area of electrical equipment in its early years. A few thousand transformers later, Alfen launched an offer of charging stations for electric vehicles in 2008 and, in 2018, a mobile energy storage system. In March 2020, the company claimed 100,000 electric charging stations installed. For this reason, it has a long history and proven technologies, which it has adapted over time to reorient itself in the most dynamic markets.
Alfen is still heavily exposed to the Netherlands, where it generates around 60% of its revenue. The remaining 40% are spread across the rest of Europe. The most dynamic sector is electric vehicle charging stations, whose turnover doubled last year and which now represents 42% of the activity. Smart grid solutions, which are an extension of historic activity, still generate 50% of revenue, but their slower growth rate means they will be overtaken this year by charging stations. The third branch of activity, energy storage, represents only 7% of the total, but it is easy to understand that it is a pole of the future, complementary to the other two.
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Growing demand in the coming years
A look at financial ratios shows that Alfen is a “trendy” value. In other words, investors are willing to pay a very high price for their place in the capital: 60 times the expected results this year. To give you an idea, the current median of the European market is 16 times and the big players in the power grid, such as Schneider or ABB, are valued at 18 to 20 times the expected profits for the current year. This fashion effect makes the company’s shares quite volatile. This does not prevent management from implementing its development program improving profitability. Operating margin increased from 1% in 2018, the year of the IPO, to 11% in 2021. It should continue its gradual rise. Certainly not in the same proportions, but with great regularity.
On the balance sheet side, Alfen is not in debt and its cash generation is on an upward trajectory, which should allow it to respond to growing European demand. The electric vehicle charging market is expected to grow by 25-30% per year over the next ten years. In other words, it’s the right place at the right time to be the only truly integrated player in the specialty.
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Lest the story be too good to be true, there are headwinds to cite too – in addition to the aforementioned rarity price. Alfen is relatively small (2.5 billion euros in market capitalization). In its original business and more broadly in the material part, the group lives with sacred customers. Schneider, for example, mentioned above. In addition, the other side of the coin of the strong growth of the sector is the arrival of many competitors, although the seriousness of some of them is debatable. But despite these elements, Alfen has a good head start on this solid and sustainable theme of electrification of mobility.
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