Original-Research: INDUS Holding AG (von NuWays AG): Kaufen

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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

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