Original-Research: Nabaltec (von NuWays AG): Buy

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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

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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

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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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2005621 10.10.2024 CET/CEST

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