London, UK, 15 October 2018

Edison issues outlook on Carbios (ALCRB)

H118 results were broadly in line with our expectations and Carbios (ALCRB) retains sufficient cash to finance its business until H219. The company continues to make progress with its transformation from a research body to a commercial enterprise. We expect the first commercial revenues from Carbiolice in 2020. Our DCF indicates a valuation for Carbios of EUR15/share.

We continue to use a DCF-based valuation approach for Carbios, although the timing and scale of future cash flow projections remain uncertain, and will be dictated by the pace of technological development and the commercial environment. Our DCF indicates an unchanged valuation of EUR15/share although, at the current share price, the market appears to be assuming a 65% probability of Carbios achieving our revenue and margin projections. In addition to the uncertain nature of the cash flow projections, the valuation remains sensitive to assumptions on discount rates, perpetuity growth rates and long-term margins. An increase in the discount rate from 15% to 20% would reduce the valuation to EUR5/share.

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