Topic: MAX Automation has come to an agreement on the divestment of its subsidiary MA micro with an attractive purchase price, sale of MA micro anticipated in the second half of FY24e.

MAX Automation announced the sale of MA micro (intention was announced in September 2023), which was already part of discontinued operations at the end of FY23 to the Japanese conglomerate, Hitachi Ltd. The purchase price of € 71.5 - 76.5m is still subject to the FY24e performance of MA micro.   

After the acquisition is completed, MA micro will join JR Automation Technologies, a Hitachi group company, and market leader in providing advanced automation solutions and digital technologies in the robotics systems integration business. The transaction is subject to various customary conditions, in particular the granting of merger control approvals and is expected to be closed in the second half of FY24e. MAX intends to use the proceeds from the sale primarily to reduce financial liabilities by partially repaying the syndicated loan (end of FY23: € 120.8m).   

The sale has no influence on our financial estimates of FY24e as MA micro was already part of discontinued operations. However, as the proceeds will be used to partially repay the syndicated loan (eNuW: 10% interest rate), annual interest expenses should decline by € 7.4m, potentially boosting EPS by 40% (eNuW), not reflected in our estimates until the transaction closed.

Taking into account the weak operating performance of MA micro during the last year (-28% revenue yoy, -17% EBITDA yoy) and a likely further deterioration in FY24 due to the subdued order momentum (eNuW), the purchase price looks attractive in our view (eNuW FY24e: Sales € 40m, € 6.6m EBITDA). The implied sales multiple of 11x EV/EBITDA is 30% above the group’s current valuation of 8.5x, which underpins the undervaluation of the stock. Mind you, the crown jewel bdtronic and Vecoplan have bright business prospects and should be worth considerably more than 8.0x EV/EBITDA.

We reiterate BUY with an unchanged € 8.20 PT based on DCF.