Edison Investment Research Limited: Edison issues outlook on paragon (PGN)

London, UK, 16 August 2017

Edison issues outlook on paragon (PGN)

Following a visit to paragon's expanded Delbrück facility and the successful EUR50m 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 EUR82.1/share based on our updated DCF scenarios.

Following full year results, continued strength in H117 and our site visit, we have reassessed the medium-term outlook potential for the group and lifted our mid- to long-term forecasts. As a result, our DCF-based fair value has increased to EUR82.1/share (EUR40.1/share in October 2016) to reflect our increased confidence in paragon's ability to turn significant top-line growth into bottom-line profit. An indication of the benefit of the automated line showing through in results is likely to act as a catalyst to another re-rating.

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