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: BUY
from: 22.02.2024
Target price: 36.00
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Christian Sandherr

Solid FY23 prelims // focus on strong FCF & share buyback; chg.

Topic: While prelim. FY23 sales and EBIT came in largely as expected, the strong FCF generation of € 190m is well above expectations. On top, INDUS announced a 4.1% share buyback at € 23.

Preliminary FY23 sales remained stable yoy at € 1.80bn (eNuW: € 1.82bn), despite unfavourable economic conditions in the construction industry; Q4 sales -5.0% yoy to € 436m. Thanks to a strong Engineering Segment, FY23 operating EBIT came in at € 150m (eNuW: € 152m), implying a 8.3% margin, up 0.9pp yoy and above the guidance range of 7-8%; Q4 EBIT of € 32.7m, a 7.5% margin.

The Engineering segment delivered slight revenue growth and noticeable growth in earnings for FY23e. Sales in the Infrastructure segment were flattish yoy with a slightly lower EBIT as the slowdown in the construction sector impacted several portfolio companies, particularly in H1. Revenues in the Materials segment decreased modestly but with a significantly higher EBIT due to price increases.

Most importantly, Free cashflow came in above € 190m materially improving yoy (2022: € 102m), exceeding the guidance of € 100m and eNuW of € 89m, caused by further noticeable working capital normalizations. As a result, net debt decreased by € 87.3m to € 506m, strengthened the equity ratio to 37.3% (FY22: 36.8%). Further, the strong cashflow generation gives INDUS with additional financial flexibility regarding acquisitions and dividend payments.

Thanks to the INDUS announced a share buyback for up to 1.1m shares at a price of € 23 during the period from February 22nd, 2024 to March 1st, 2024. Thus, the volume of the buyback amounts up to € 25.3m in aggregate, leading to approximately 4.09% of the company’s registered share capital. This underlines not only the strong cash generation of the company but also the current undervaluation.

FY24e guidance in line with expectations. Management anticipates revenues in the range of € 1.85-1.95bn (eNuW: € 1.88bn) with an EBIT between € 145-165m in FY24e (eNuW: € 150m). Despite of the continuously challenging end markets and general macroeconomic conditions, we regard the guidance as doable due to price increases and slight pickup of demand across several portfolio companies.

Trading at only 4.1x EV/EBITDA 2023e, 59% below its historical average, INDUS remains attractively priced. We reiterate our BUY rating with an increased PT of € 36 (old: € 34) based on FCFY 2024e.

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http://www.more-ir.de/d/28957.pdf
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Kontakt für Rückfragen
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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