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: 15.05.2024 Target price: EUR 36.00 Target price on sight of: 12 Monaten Last rating change: Analyst: Christian Sandherr

Mixed Q1 results // strong FCF generation; chg. est.

Topic: INDUS reported a mixed Q1 with sales below but EBIT above estimates as well as strong free cashflow supported by a lower seasonal working capital increase.

Q1 sales decreased by 9% yoy to EUR 410m (eNuW: EUR 434m) due to customers' current reluctance to buy and spend as a result of the weak German economy. Q1 EBIT was down 40% yoy to EUR 26.7m (eNuW: EUR 25.3m), implying a margin of 6.5% (-3.4pp) driven by neg. op. leverage as well as pressure from significantly higher wages and salaries. Mind you Q1 FY23 was an exceptionally strong quarter, which also benefited from decreased material costs within the Materials segment. Positive, while sales in the Infrastructure segment declined 6.8% yoy to EUR 132m, EBIT rose to EUR 11.4m (Q1 FY23: EUR 10.7m) supported by internal efficiency gains.

Strong cash generation: Free cashflow in the first quarter came in at EUR 6.1m (Q1 FY23: EUR 7.5) driven by a lower seasonal working capital increase due to the stabilization of supply chains and lower procurement prices. Mind you, last years' FCF includes a EUR 14.4m one-time cash inflow from a property sale.

FY guidance confirmed. Management confirmed its FY24e guidance of EUR 1.85-1.95m (eNuW: EUR 1.85m) revenue and EUR 145-165m EBIT (eNuW: EUR 157m), despite the challenging start into the year, which was largely anticipated by the market. In our view, the guidance seems plausible, however we expect sales to come in at the lower end of the guidance range due to an increasing pressure on selling prices in the Materials segment. In addition, the outlook for the construction sector remains cautious, as the German construction industry federation (HDB) expects a 3.5% decline in real-term sales in 2024.

INDUS remains an attractive investment case and dividend-stock for the mid-term. Mind you, management proposed a dividend of EUR 1.20 per share (AGM on 22 May), making INDUS an attractive dividend stock with a yield of 4.4% based on yesterday's closing price. Due to the divestment of the lossmaking automotive business in FY23 and an ongoing solid operating business, we expect a further dividend rise for the current fiscal year (eNuW: EUR 1.40).

INDUS remains a BUY with an unchanged EUR 36 PT based on FCFY 2024e as (1) shares seem attractively valued trading at 4.7x EV/EBITDA 2024e, which is 23% below the 10-year historical average, (2) INDUS is generating double-digit ROCEs and (3) has a strong future dividend yield potential.

You can download the research here: http://www.more-ir.de/d/29747.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. ++++++++++

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(END) Dow Jones Newswires

May 15, 2024 03:36 ET (07:36 GMT)