London, UK, 2 August 2018

Edison issues outlook on paragon (PGN)

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 EUR98 per share.

Voltabox is now directly valued by the market and while that valuation can be debated in isolation, it implies a valuation of the remainder of paragon. Currently, the implication appears undemanding, with the ex-Voltabox element of paragon trading on just 1.6x FY18e EV/EBITDA. Given the expected strong growth across all divisions, the very positive market outlook for Voltabox, and our DCF value of EUR98 per share, there would appear to be potential for an upwards re-rating.

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