current research report

-The company's H1 2008 results corresponded to our expectations. We evaluate positively that margins increased further in Q2 compared to quarter-earlier levels. In spite of a 30% drop in sales, AGO raised its net profit to EUR0.581m (0.524; our forecast: 0.604).

-The company specified its guidance for the current fiscal year. Sales should significantly exceed EUR40m in 2008.
EBIT for the full year is expected to reach a multiple of H1 EBIT (EUR0.581m). In view of the company's new orders and backlog of orders, we feel that the company's guidance is realistic. We reaffirm our sales and profit targets for 2008 through 2010.

-In our view, AGO is making good headway on attaining its strategic goals. Following the acquisition of shelf company Reindeer, AGO is going to open its first energy centre in Italy in 2010. We welcome the fact that the company has secured for itself the raw materials required for another two to three facilities.

-We expect an increasing steadiness in sales growth and cash-flow as a result of the expansion of the plant operation business and the company's internationalisation, particularly the market entry in Italy. Furthermore, we expect an increase in profitability. In our opinion, the current share price does not sufficiently reflect AGO's growth and income potential.
We assume that the recent decline in fossil energy prices will be a temporary phenomenon.

-With the help of our DCF model we calculated a fair value of EUR5.99 (before: 6.38) for the AGO share, from which we derive a price target of EUR6.00 (before: 6.30). We expect that the share will be stimulated in the coming months by the announcement of further plant operation projects. At the current price level, the AGO share has an upside potential of approximately 28%. We reaffirm our Buy recommendation.

Business development in H1 2008

Sales and profit development
AGO's results for H1 2008, which were published on August 14, were in line with our expectations. Sales declined by 30% to EUR14.81m (21.15; our forecast: 15.16). The drop in sales was mainly accounted for by the Project Development business, which is subject to strong fluctuation. Gross profit from sales was up 40% at EUR1.99m (1.42;
our forecast: 1.80). Here, AGO benefited from, among other things, the fact that most realised projects were self-planned unlike the year before. Accordingly, the gross profit margin improved to 13.4% (6.7%). EBIT growth was disproportionately low compared to gross profit from sales with an 11% rise to EUR0.581m (0.524; our forecast: 0.604), which was due to a significant increase in distribution cost (+25.5%) entailed in acquisition measures. The EBIT margin rose to 3.9% (2.5%). In Q1 2008, AGO had recorded an EBIT loss of EUR0.09m. Owing to a decline in financial results (EUR-0.329m after EUR- 0.192m), the pre-tax profit dropped by 24% to EUR0.252m (0.332; our forecast: 0.323).

Thanks to a lower tax rate (38% after 74%), net income after minority interests increased by a strong 66% to EUR0.146m (0.088; our forecast: 0.151).
As for Q1 2008, there are no year-earlier reference figures for Q2 2008 because AGO did not release any individual results for Q1 2007 and Q2 2007. With sales of EUR9.46m, AGO recorded a gross profit from sales of EUR1.304m and EBIT of EUR0.671m. Consequently, the gross profit margin reached 13.8%, which exceeded the high Q1 margin (12.7%). The EBIT margin climbed to 7.1% (Q1 2008: -1.7%). Net income after minority interests amounted to EUR0.371m (Q1 2008: -0.225).