Original-Research: Nabaltec - from NuWays AG
10.10.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS Group AG.
The issuer is solely responsible for the content of this research. The result of this research does not constitute investment advice or an invitation to conclude certain stock exchange transactions.
Classification of NuWays AG to Nabaltec
Company Name: Nabaltec
ISIN: DE000A0KPPR7
Reason for the research: Update
Recommendation: Buy
from: 10.10.2024
Target price: EUR 25
Target price on sight of: 12 months
Last rating change:
Analyst: Christian Sandherr
Conference feedback: Too cheap to ignore
During last week's European MidCap conference in Paris, the CEO of Nabaltec provided insights into key topics. Here are our takeaways:
Continued strong demand for Nabaltec's core product. Mind you, ATH is an environmental friendly flame retardant, which is primarily used in cables and wires. As during recent quarters, demand from investments into data centres and renewable energy sources as well as an improving US construction industry are seen to sustainably drive sales growth.
Gap filler with growing importance, investments in capacities. Initially introduced in 2021, sales from the white powder, that significantly improves thermal management capabilities of adhesives used in EV batteries, is seen to reach EUR 6.5m in FY24e. In light of current production capacities that allow ~ EUR 10m sales and a clear commitment from customers, Nabaltec is increasing 4x its production capacities. Importantly, the new production line is fully automated and frees up ~ 20kt ATH production capacities. Total investment stand at around EUR 25m, spend until the end of FY25e.
Boehmite remains slow following a stronger H1 due to a positive one-off. During H1, boehmite sales stood at roughly EUR 8m, positively impacted by a EUR 1.8m (eNuW) order from a Chinese customer. Unlike last year, the second half of this year should not be marked by a notably up tick in demand (FY24: -18% to EUR 14.5m). Mind you, >80% of the separator production is located in China. While management expects strongly growing demand for ceramic coatings in e-mobility, we model only a slight growth for next year.
Current capex program to be paid for by op. cash flow. This and next year, Nabaltec plans to spend a cumulative EUR 50-55m on capex to lay the foundation for further growth of ATH, its gap filler and boehmite. Importantly, the company's operating cash flow during those two years should be largely sufficient to cover the whole investment program. Mind you, the op. CF at the end of H1 FY24 stood at EUR 24m, thanks to the good operating performance but also a normalization of working capital.
Attractive growth potential. Taking into account the available capacities across its three production site following the current investment initiative, Nabaltec should be able (once fully utilized) to generate some EUR 300m sales, EUR 55m EBITDA and EUR 40m FCF (eNuW).
Q3 to come in as another good quarter. Following a strong H1 with EUR 108m sales (+2.2% yoy) and a 9.9% EBIT margin (+1.9pp yoy), the third quarter is seen to paint a similar picture with EUR 50.5m sales and a 9.1% EBIT margin (eNuW) despite the seasonally weak August and the absence of a EUR 1.7m positive boehmite one-off from Q2. With this, the 9M sales growth figure should be inline with the FY guidance of 2-4% yoy sales growth and ahead of the targeted 7-9% EBIT margin with 9.8%, eNuW.
Expiring gas/raw material contracts no reason for concern. Nabaltec usually enters into multi-year gas/raw material supply contracts, which are due to be renegotiated (for several years) at the end of this year. While the currently higher gas price levels should have a notable P&L impact (eNuW, EUR 2-2.5m p.a.), raw materials (mainly alumina) should have an opposing effect, mostly offsetting each other.
Shares remains attractively valued. At EUR 15 per share, Nabaltec trades roughly 11% below its book value of EUR 16.7, while offering 11.7% adj. FCFY, a strong balance sheet and significant mid- to long-term potential. We confirm our BUY rating with an unchanged EUR 25 PT.
You can download the research here: http://www.more-ir.de/d/31027.pdf For additional information visit our website: www.nuways-ag.com/research
Contact for questions:
NuWays AG - Equity Research
Web: www.nuways-ag.com
Email: research@nuways-ag.com
LinkedIn: https://www.linkedin.com/company/nuwaysag
Adresse: Mittelweg 16-17, 20148 Hamburg, Germany
++++++++++
Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse. ++++++++++
The EQS Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Archive at www.eqs-news.com
2005621 10.10.2024 CET/CEST
°
