Topic: After an already muted FY24e, we expect the situation to remain challenging during FY25e. Nevertheless, mid-term prospects continue to be solid and the investment case remains intact.
Thus far, sales in 9M'24 declined by 5.8% due to a soft order backlog and investment reluctance across all portfolio companies except ELWEMA. With a book-to-bill ratio of 0.86x, the order backlog decreased 19.8% yoy to only € 165m end of 9M'24. This should put further pressure on top-line growth for FY25e in addition to low order intake numbers. Hence, we expect sales to come in at € 364m, showing a flat development yoy. Moreover, we expect EBITDA to decline to € 25m due to increasing personnel costs and a € 4.5m positive one-off in Q3'24 from a litigation in connection with the sale of NSM Packtec.
The situation is particular troublesome for bdtronic due to low order intakes affected by the EV crisis. Especially Germany showed decreasing EV (excluding PHEV) registrations of 26% yoy in 11M'24 (source: VDA) due to the abrupt end of the environmental bonus in December 2023. In addition, the supply of affordable cars from China increases the competition for bdtronic's core market (Germany 35% of sales in FY23, other Europe 33%). While FY24e was still able to benefit from a solid order book at the end of FY23, FY25e should be affected increasingly from the recently declined backlogs (€ 30m 9M'24 vs. € 76m 9M'23). Consequently, we expect a material sales decline to € 77m next year and EBITDA to remain on a low level due to negative operating leverage and the increased headcount during 2023. Having said that, bdtronic remains a leading expert in its field and once the cyclical demand recovers, we expect top- and bottom-line to normalize.
On the other hand, Elwema shows resilience. Thanks to a steady stream of follow-up orders (+26% yoy order intake in 9M'24) and long lead times of 12-18 months, the company has secured already well enough projects for FY25e. Hence, we expect to see mid- to high single digit growth rates for FY25e.
Sale of MA micro supports bottom-line: MAX received c. € 70m cash inflow for the sale of MA micro in Q3'24, of which c. € 60m was used to reduce debt. This should lead to an interest expense reduction of € 4-5m in FY25e (eNuW) supporting the bottom-line substantially and could potentially even lead to an increase in earnings from continuing operations (eNuW FY25e € 6.2m vs. € 5.5m in FY24e).
Reiterate BUY with an unchanged PT of € 7.00, based on DCF.
ISIN: DE000A2DA588
