Major Contracts to double sales

The DCF has been impacted by the announcement of another major contract with Aquiline Drones. The contract concerns the sale of 500 Hercules 20 drones and 200 Hercules 10 drones, which is estimated to represent 15 $M of additional sales at the catalogue price. Contrarily to the previous Aquiline Drone’s contract concerning the 600 Hercules 2 which is fixed before 2021, this new contract will be spread from 2021 to 2022 progressively and will only be fully executed if Aquiline Drones manages to find enough customers in the US. Their “flight to the future” program should help them reach their ambitious targets.

We have decided to count 60% of this contract in our estimates which could leave room for positive surprises, with 1/3 accounted for in 2021 and 2/3 in 2022. This growth in sales improves margins for FY22, as bigger orders allow for larger supplier discounts. Our DCF has increased by 10% to 0.48€, boosting the target price to 0.34€.

The target price has been slightly improved, driven by the higher top-line growth in 2022 linked to the new contract of Aquiline Drones, which will mostly be executed next year. This positive impact was partly offset by a downward revision in margins, which we had overestimated for the current year.

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