Topic: R. Stahl confirmed its strong FY23 prelims and released a promising FY24e guidance supported by a solid preliminary first quarter revenue of € 84.7m.  

To recap, FY23 sales increased by 21% yoy to a record high of € 331m, exceeding the guidance range of € 305-320m. The remarkable increase in revenue was carried by an unbroken demand for electrical explosion protection solutions in the LNG and gas industry as well as further improved supply chains and price increases. The adj. EBITDA grew by 73% to € 38.6m, hitting the guidance range of € 35-40m with a significantly improved margin of 11.7% (+3.6 pp) due to price increases as well as a good utilization of production capacities and targeted cost management.

What’s new: Free Cashflow improved to € 0.3m (FY23: € -4.4m), due to a strong operating performance and despite a further expansion of working capital. For instance, inventories and prepayments rose 30% yoy to € 64m (FY22: € 37m) due to an increased stock in electronic materials. Furthermore, R. Stahl recognized a full impairment of the 25% stake in the Russian company ZAVOD Goreltex as expected (NuWays Update 16.02.2024). However, the € 10.3m write-off did not affect liquidity and adjusting for the impairment, EBT would have been € 12.3m (FY22: € 3.9m).

Solid Q1 sales with profitability on a high level: Preliminary sales in the first quarter came in at € 84.7m (eNuW: € 81m), an 8.5% increase yoy (Q1 FY23: € 78.1m). After a subdued order intake of € 74.5 in the fourth quarter, due to a soft chemical industry in the DACH region, order intake came in at € 92.3m, slightly below last year (Q1 2023: € 96.7m). Adj. EBITDA in the first quarter decreased 19% to € 8.4m (eNuW: € 7.9m), with a lower but still solid margin of 9.9% (-3.4 pp) due to higher personnel costs and a € 2m one-off from the implementation of the EXcelerate strategy program.

Conservative FY24e guidance: Management expects sales in the range of € 335-350m (eNuW: € 347m) and an adj. EBITDA of € 35-45m (eNuW: € 39.7m) supported by a strong demand from the LNG industry. In our view, the guidance seems reasonable thanks to R. Stahl having done its homework by implementing changes on the back of efficiency, structural trends kicking in and a high preliminary order backlog of € 123m at the end of Q1. We reiterate our BUY rating with a slightly reduced PT of € 29 (old: € 31), based on DCF.