Original-Research: INDUS Holding AG - from NuWays AG Classification of NuWays AG to INDUS Holding AG Company Name: INDUS Holding AG ISIN: DE0006200108 Reason for the research: Update Recommendation: Kaufen from: 22.03.2024 Target price: EUR 36.00 Target price on sight of: 12 Monaten Last rating change: Analyst: Christian Sandherr Strong FCF supports further growth; chg.
22.03.2024 - 09:01:37Original-Research: INDUS Holding AG (von NuWays AG): Kaufen
Original-Research: INDUS Holding AG - from NuWays AG Classification of NuWays AG to INDUS Holding AG Company Name: INDUS Holding AG ISIN: DE0006200108 Reason for the research: Update Recommendation: Kaufen from: 22.03.2024 Target price: EUR 36.00 Target price on sight of: 12 Monaten Last rating change: Analyst: Christian Sandherr Strong FCF supports further growth; chg. Topic: INDUS reported solid FY23 figures especially in light of the currently challenging macro environment. Results are in line with the preliminary numbers and FY23 guidance. Further, INDUS had its capital markets day yesterday in Frankfurt. Here are the key takeaways: FY23 sales came in at EUR 1.80bn, roughly unchanged from last year, despite a difficult macro environment. While EBIT increased by 11.9% yoy to EUR 150m, it is important to note that the impairments of EUR 19m in FY23 due to higher interest rates were significantly lower compared to the EUR 43m in FY22. Adjusted EBIT (excl. impairments) stood at EUR 169m (- 4.3% yoy) resulting in an implied adj. EBIT margin of 9.4% (- 0.4pp yoy). For FY24e we expect no further impairment of goodwill, as interest rates are seen to reached the zenith. FY23 sales in the Engineering segment increased slightly to EUR 600m (+ 3.2% yoy; eNuW: EUR 590m) and adj. EBIT increased 1.5% to EUR 62m, leading to a solid adj. margin of 10.4% (- 0.1 pp), supported by an improved situation in measurement and control engineering due to an ease of the semiconductor shortage in FY22. Sales in the Infrastructure segment came in at EUR 582m (eNuW: EUR 588m), almost at the previous year's level (- 0.6% yoy). Adj. EBIT came in at EUR 57m with a margin of 9.8% (-1.1 pp) and declined 11% due to high costs for concrete and sand as well as a strong slowdown in the construction sector. The Materials segment showed slightly lower sales of EUR 620m (- 2.7% yoy; eNuW: EUR 641m), as a result of lower sales prices and volumes, while adj. EBIT was roughly unchanged at EUR 64m (- 1.1% yoy), with a margin of 10.3% (-0.1 pp). CMD feedback: Free cashflow in FY23 came in at EUR 199m and reached a new record high, growing 96% yoy. However, cashflows were supported by a reduction in working capital of EUR 30m during FY23 (FY22: + EUR 53m) and a EUR 15m inflow from the disposal of an office building. Supported by the strong FCF, management intends to spend EUR 70m for acquisitions during FY24e. The 1.1m recently acquired treasury shares could serve as form of payment and are not included in the EUR 70m budget. Hence, we expect to see more acquisitions coming in this year, especially in the field of infrastructure networks, automation and energy technologies. Considering the currently low valuations of the German Mittelstand, this is a good opportunity to acquire further niche players to fuel the growth for the coming years. Attractive dividend yield: Management proposed a dividend of EUR 1.20 per share (eNuW: EUR 1.20), making INDUS an attractive dividend stock with a yield of 4.8% based on yesterday's closing price. Due to the divestment of the loss-making automotive business in FY23 and an ongoing successful operating business, we expect a further dividend rise for the current fiscal year (eNuW: EUR 1.40). Mind you, INDUS plans to pay out up to 50% of the group's net income. During the short- to mid-term, management plans to grow EBIT to more than EUR 200m, which could lead to a dividend of EUR 1.90 per share (40% payout), a 7.5% yield. Valuation looks undemanding with shares trading at 4.4x EV/EBITDA 2024e (26% below the 10y historical average) while offering 11% adj. FCF yield. We reiterate BUY with an unchanged PT of EUR 36 based on FCFY 2024e. You can download the research here: http://www.more-ir.de/d/29225.pdf For additional information visit our website www.nuways-ag.com/research. Contact for questions Die Analyse oder weiterführende Informationen zu dieser können Sie hier downloaden: www.nuways-ag.com/research. 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. ++++++++++ -------------------transmitted by 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.
