Classification of NuWays AG to INDUS Holding AG

Company Name:	INDUS Holding AG
ISIN:	DE0006200108
Reason for the research:	Update
Recommendation:	BUY
from:	14.08.2024
Target price:	EUR 34.00
Last rating change:
Analyst:	Christian Sandherr

Mixed Q2, Engineering affected by weak economy; chg. est.

Topic: INDUS released its Q2 numbers with sales in line and EBIT above our estimates, despite a challenging macro environment. The company lowered their guidance as already anticipated by us in our last Update (company news: July 31st).

Q2 sales decreased by 5.4% yoy to € 429m (eNuW: € 437m), impacted by customers’ current reluctance to buy and spend as a result of the weak German economy. Q2 EBIT came in at € 37.4m (eNuW: € 32.1m), implying a margin of 8.7%, almost unchanged yoy (Q2’23: 8.8%), despite pressure from wage inflation. Order intake in H1’24 fell slightly by 1.3% yoy to € 828m mainly due to a weaker Materials segment (-9% yoy). Order backlog increased by 1.2% to a solid € 720m.

Engineering: Sales came in at € 137m (eNuW: € 147m), -1.4% yoy due to a lower demand for sorting plants and packaging technology. EBIT decreased 37% to € 6.5m (eNuW: € 8.8m) due to an unfavorable product mix. However, higher sales and a more profitable product mix are expected for H2’24e.

Infrastructure: Top-line decreased 3.3% to € 145m (eNuW: € 142m). While the momentum in commercial construction is slightly picking up, the demand in residential and public construction is still muted. EBIT increased 27.4% yoy to € 18.3m, thanks to several cost-cutting measures.

Materials: Sales decreased by 10.6% yoy to € 147m (eNuW: € 148m) affected by declining prices and a slowdown in the agricultural industry (c. 20% of Betek’s sales). Operating income declined only by 10.3% yoy to € 16.0m (eNuW: € 11.1m), despite significant pricing pressure from customers.

M&A pipeline well filled: INDUS is currently working on several acquisitions, as the multiples for private companies especially in the German Mittelstand came down in recent years. The conglomerate holds on to its target to spend € 70m on M&A in FY24e of which it spend € 18.5m at the time. Further, as stated in the conference call, we should expect to see the closing of two acquisitions within the coming weeks.

INDUS remains a clear BUY in our view as the company is (1) trading at only 6.6x forward P/E (eNuW), (2) offers an expected dividend yield of 5.7% (eNuW FY24e: € 1.2 per share), and (3) delivers a strong FCFY24e of c. 10%. Consequently, we included INDUS to our Alpha list.

Reiterate BUY with a new PT of € 34 (old: € 36), based on FCFY24e.

You can download the research here: http://www.more-ir.de/d/30457.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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Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.
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