Topic: DOC has recently reported FY’24/25 results and resumed its dividend payment after many years. In detail:

In Q4, sales rose by 14% yoy to € 524m, particularly driven by Airline Catering (+18% yoy, 85% of sales) and Restaurants, Lounges and Hotels (+9% yoy; 8% of sales). The International Event Catering segment decreased against a tough comparable base by 19% yoy (7% of sales), but nevertheless showed a sound development throughout FY’24/25 (+6% yoy sales growth). Consequently, DOC’s FY24/25 sales arrived at € 2.3bn (+26% yoy) and thus at the upper end of the sales guidance (€ 2.25-2.3bn). Mind you, the strong growth should have mainly stemmed from past tender wins (€ 400m additional sales or 22% sales growth) whereas the remaining 4% sales growth (ex customer wins) were driven by higher passenger numbers and slight price increases. On profitability, DOC has reached its 8% FY EBIT margin target to the point (Q4: 8.5% EBIT margin).

Against this backdrop, DOC continued to deleverage, paying back a total of € 150m debt last fiscal year. On the back of a strong € 106m FCF, the net debt position thus decreased from € 218m to € 170m (0.6x EBITDA). In light of this, management proposed a € 2.00 DPS (€ 22m payout; 24% payout ratio) to be paid in two weeks. Mind you, last year’s dividend was scrapped despite a record profit only as a precautionary measure to not violate COVID aid conditions.

For FY’25/26e we expect sales to continue to grow by 8% yoy to € 2.5bn. This is based on further tender wins and market share gains to the tune of € 60-80m, explaining 4% sales growth already. The transatlantic routes are of great importance for DOC (c. 40% of sales). Now, the recent US recession fears have eased further (Powell: “US economy in

solid position”). Mind you,

the ongoing aircraft shortages also means that airlines deploy their planes on routes with higher demand, which stabilizes overall passenger dynamics (IATA expects +4% yoy global passenger growth in ‘25). Based on all this, we feel confident about our overall sales growth estimate.

Against this backdrop, the recent negative share price reaction seemed unjustified. Albeit a solid recovery from the trough at € 130 per share, DOC currently still offers an attractive entry opportunity with a 34% upside potential to our DCF based PT of € 234. - change in analyst -