^

Original-Research: Nabaltec AG - from NuWays AG

Classification of NuWays AG to Nabaltec AG

Company Name: Nabaltec AG
ISIN: DE000A0KPPR7

Reason for the research: Update
Recommendation: Kaufen
from: 27.06.2024
Target price: EUR 25.00
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Christian Sandherr

Further op. improvements // FY guidance conservative

Topic: Despite the recent 30% share price increase since the low in March,
Nabaltec remains on our Alpha List with the key reasons for it being (1)
further operational improvements in Q2 and a too conservative FY guidance,
(2) the promising optionality of boehmite and (3) an attractive valuation
with shares below the book value.

Following a solid Q1 with EUR 54m sales and a 9% EBIT margin, Nabaltec looks
set to report further operational improvements in Q2; eNuW EUR 55m sales
(+12% yoy) and a 9.1% EBIT margin (+2.4pp yoy). While demand growth for
boehmite should remain muted, its environmental flame retardants (~63% of
group sales) are seen to be the key driver as they benefit from rising
investments into data centres.

FY guidance looks increasingly conservative. Mind you, management expects
to grow FY24e sales slightly with an EBIT margin of 7-9%. Considering the
expected (eNuW) H1 performance with EUR 109m sales (+2.7% yoy) and a 9.2%
EBIT margin (+1.2pp yoy), the lower end of the margin guidance implies a
margin of only 4.6% for the remainder of the year.

Lagging boehmite demand, yet a promising optionality. During the past 1.5
years, demand for boehmite, the high-margin coating material for separator
foils and electrodes of lithium-ion batteries in EVs, has been weak with
sales falling from EUR 24m in FY21 to EUR 17m last year. The main reason behind
this was a strong oversupply in China (lacklustre EV demand growth), the
core market for EV battery production as well as a slower than initially
expected ramp up of production capacities in Europe and the US. Yet, with
demand for ceramic coating solutions expected to 4x until 2028, boehmite
should return to growth; eNuW: From EUR 17m in FY23 to EUR 25m by FY25e.

Valuation remains highly attractive. At EUR 16.2/share, Nabaltec still trades
below its book value (EUR 16.70/share at the end of Q1). For comparison, the
company has historically been trading at ~2x P/BV throughout the last 10
years. At the same time, the company offers 10% FCF yield (FY24e) and a
healthy balance sheet.

We confirm our BUY rating with an unchanged EUR 25 PT based on FCFY 2025e and
keep Nabaltec
on our Alpha List.

You can download the research here:
http://www.more-ir.de/d/30105.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.
++++++++++

-------------------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.

°