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Automation to drive enhanced returns

Outlook | General Industrials | 16 Aug 2017

Following a visit to paragon’s expanded Delbrück facility and the successful EUR 50m bond issue, we have revisited and upwardly revised our medium-term growth and margin outlook for the group. With 2016 results having met forecasts despite some timing headwinds and future years underpinned by substantial contract wins across the electromobility division, we believe paragon is on the cusp of further accelerated growth. With proceeds from both the October 2016 capital increase and June 2017 bond issue being invested to support this accelerated growth, we raise our fair value to EUR 82.1/share based on our updated DCF scenarios.


Executive interview - paragon

Edison TV: | General Industrials | 10 Dec 2018

EKF conference 2018.


Dynamic driving

Update | General Industrials | 19 Nov 2018

Despite rapid growth, paragon's shares have performed poorly since thepositive reaction to half year results in August, in part due to valueattribution from Voltabox which has also slipped back. Recent acquisitionsof SemVox by paragon and Navitas and ACCURATE by Voltabox do notwarrant the reaction, and we expect Q318 results in November to underpinmarket expectations. On our forecasts, paragon is now trading on anundemanding FY19 P/E of just 9.4x and our DCF remains at €95 a share.


Accelerating progress

Update | General Industrials | 22 Aug 2018

paragon continues to make strong progress, with Q218 showing a clear acceleration that should enable increased group FY18 revenue guidance to be met. Voltabox is making strategic investments to augment organic growth, through the adjustment to the Triathlon supply contract and the purchase of Navitas. Although the former does not impact operational profitability, it does incur a financial cost that has led to a EUR 2m reduction in current year EBIT. We have adjusted our earnings estimates to reflect this, but we have yet to consolidate Navitas as the deal is not completed.


It's electrifying

Outlook | General Industrials | 02 Aug 2018

paragon’s continued strong growth is driven by the Electromobility division (Voltabox) and the smaller Mechanics division. With the Electronics division transitioning to a new generation of products that should return the division to double-digit growth in the medium term, paragon remains a high-growth technology innovator. Following the flotation of Voltabox in Q417 and the recent change of legal structure, paragon’s rating appears to have undergone an unwarranted decline. Our capped DCF value stands at EUR 98 per share.


Strong progress expected

Update | General Industrials | 09 Apr 2018

Having delivered results that were in line with our expectations, paragon has guided to strong progress in FY18 with sales rising by 40% to around EUR 175m and an adjusted EBIT margin maintained at around 9%. The growth will be primarily driven by Electromobility (Voltabox), but there will also be strong development by the smaller Mechanics division with good organic progress in Electronics. The current rating seems to be depressed by technical factors and does not appear to reflect the growth prospects.


On track to meet FY17 guidance

Update | General Industrials | 24 Nov 2017

Following recent corporate events, we believe the market is familiar with the paragon growth story. Based on 9M17 results, both paragon and its 60%-owned subsidiary Voltabox 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 EUR 82.1/share to EUR 86.4/share mainly to reflect the recently completed IPO of Voltabox.


Charging ahead

QuickView | General Industrials | 09 Nov 2016

paragon has consistently shown its ability to innovate and deliver leading-edge technology development for both top tier automotive OEMs and increasingly for blue-chip customers across its Electromobility division. Addressing several emerging global themes, paragon has positioned itself as a strategic partner to many global players, including recent announcements with Joy Global and KUKA, both of which take the group into new and developing end-markets and further reduce reliance on pure automotive drivers. While electromobility is set to become the main driver over the medium term, the group's core businesses continue to grow withtechnology development and international reach.


On the charge

Update | General Industrials | 26 Oct 2016

paragon has delivered several announcements over the last few months that have strengthened the medium-term investment case and highlighted the group’s significant growth potential. H116 results highlight the rapid increase in the group’s Electromobility division; all others apart from Body Kinematics also grew, generating a 9% increase in total revenues. Subsequently, the group has announced a series of contracts with significant blue-chip customers while also achieving a capital increase that was oversubscribed more than three times, which further strengthens the balance sheet and supports growth objectives.


EUR1bn lifetime order backlog poised for delivery

Update | General Industrials | 14 Apr 2016

paragon's full year results highlighted the substantial progress the group has made in both its historic core businesses and the new divisions. With record sales, operating profit and an order book in excess of €1bn, the group has significant visibility over the next five years. 2016 is likely to be a year of more moderate growth ahead of a planned ramp-up in electromobility that will accelerate from 2017. With further potential catalysts anticipated as new product launches come to market, we believe that paragon is clearly aligned to automotive megatrends.


Trends support progress

Update | General Industrials | 25 Jan 2016

paragon's shares have performed strongly since our September 2015 initiation, supported by recent newsflow from CES 2016, Chinese smog concerns and electromobility. These all demonstrate that paragon is focused on current trends with further embedded growth potential, as highlighted by its December guidance for FY16 following recent strong Q3 figures across all divisions. The combination of substantial contract wins for the group's Voltabox division and the ramp-up of the new US and Chinese production facilities provides further growth catalysts, while the group is becoming increasingly decoupled from pure automotive volumes.


Electrifying performance

QuickView | General Industrials | 09 Nov 2015

paragon is set to deliver 22%, 44% and 46% three-year CAGR in revenues, PBT and EPS respectively, driven predominantly by substantial growth from the group's move into electromobility and new product areas such as body kinematics. This is built on a strong core business in automotive electronics with a unique culture and development approach at the forefront of technological trends, many of which were exhibited by the group at IAA 2015. With few directly comparable peers that can match such growth, we use a DCF valuation approach yielding a €30.1/share fair value.