Original-Research: Einhell Germany AG - from NuWays AG

Classification of NuWays AG to Einhell Germany AG

Company Name: Einhell Germany AG
ISIN: DE0005654933

Reason for the research: Update
Recommendation: Kaufen
from: 23.05.2024
Target price: EUR 227.00
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Mark Schüssler

Q1 in line with expectations // FY24e guidance confirmed

Einhell released Q1 results in line with expectations, showing healthy top
and bottom line growth versus Q1'23 and Q4'23. Despite an ongoing depressed
consumer sentiment, sales grew by 7.8% yoy to EUR 270m (eNuW: EUR 265m), driven
by higher demand for the company's Power X-Change products (+9ppts yoy to
50% PXC share), particularly pronounced in DACH, where sales grew by 9.6%
yoy to EUR 110m (PXC share +13ppts to 62%). While Western Europe declined by
12% yoy, sales in in Eastern Europe continued to perform well, growing 16%
yoy after 18% growth in Q4'23; overseas market showed solid growth of 11%
yoy, while at the same time recovering sequentially (-17% in Q4).

EBT increased by 11% yoy to EUR 22.6m (eNuW: EUR 20.9m) with the margin
increasing 0.2ppts yoy to 8.4%, mainly due to operating leverage, offset by
PPA effects with regards to the company's acquisitions in Canada and
Thailand. Furthermore, the gross margin decreased by 1ppt to 35.8% due to
easing but still noticeable cost inflation. Personnel expenses increased by
8.4% as an elevated employee base in combination with the acquisitions in
Thailand and Vietnam weighed on operating profitability. Having said that,
along with Q1'23, the Q1'24 EBT margin of 8.4% still marks a considerable
improvement to EBT margins pre-Covid (+2.4ppts from 6%) and Covid (+0.8ppts
from 7.6%) and a decent inventory management (c. -18% yoy to EUR 341m in Q1)
should indicate fewer promotional activities going forward.

With that, Einhell confirmed its FY24e guidance of 6% sales growth yoy to
around EUR 1,030m (eNuW: EUR 1,030m) and an EBT margin of 7.5-8% (eNuW: 7.9%).
In our view, this looks achievable as the healthy sales growth and solid
EBT profitability in Q1 should provide confidence, aided by a less
challenging H2'23 comparable base. The key margin drivers should be easing
freight costs and raw materials prices as well as long-term currency
hedging to avoid extreme fluctuations in purchase prices.

After two promising acquisitions in Thailand and Vietnam in 2023, Einhell
reiterated its commitment to further international expansion with a
particular focus on a potential US market entry that should provide the
company access to the largest DIY market globally. Given that Einhell has a
sound track record of expanding internationally via M&A, rolling-out its
leading Power X-Change platform in this market should drive further market
share gains. While short-term macro challenges continue to weigh on
operating performance in FY24e, Einhell remains a key beneficiary of the
structural transition towards cordless power tools. We reiterate our BUY
rating with an unchanged PT of EUR 227, based on DCF.

You can download the research here:
http://www.more-ir.de/d/29873.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
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