Amara - comment

Solar volumes are holding up better than expected, outweighing the more disappointing development of smart grids (allegedly temporary). But margins on solar panels are among the tightest in the inventory, and so even though revenues again beat our expectations, EBITDA and therefore FCF are again down and in the case of the latter, negative. Cash is running tight at €21m (Amara needs €10-15m to run the business), and although management calculate liquidity of €105m (incl. RCF, factoring and financing lines), we don’t think the RCF can be fully drawn now and at the current rate of negative FCF, it won’t be long before the company needs fresh cash. Debt carrying capacity is nil for the moment, but, in the low 20s, the bonds create the company at a mere €100m, a price we consider attractive for a company with a reason to exist (at least through the cycle) and a strong medium-to-long-term industry outlook. We are holding on to our position, but recon with a restructuring before the next coupon is paid.