Nabaltec AG Receives "BUY" Rating from NuWays AG with New Target Price

Nabaltec AG has been given a "BUY" recommendation by NuWays AG, with the research update published on March 6, 2024, indicating a new target price of €25.00. Despite the challenges forecasted in the macroeconomic environment for FY24, the valuation is considered overly pessimistic by NuWays AG analysts. In Q4, Nabaltec's sales were reported at €44.2 million, a 14% decrease year-over-year, attributed mainly to declines in the Speciality Alumina segment. However, profitability for Q4 exceeded expectations, with EBIT standing strong at €5.2 million.

The report also highlighted the expected slight growth in FY24 sales by approximately 3.9% with an EBIT margin forecasted between 7-9%. This growth is anticipated to be driven by an increase in boehmite volumes, growing demand for gap filler, and improved utilization rates at U.S. plants. Despite uncertainties, specialty products like boehmite and APYRAL are seen as potential significant contributors to earnings growth.

According to NuWays AG, Nabaltec's valuation does not reflect its financial strength, pointing out that it trades at 7.5x EV/EBIT for FY24e, which is a 30% discount to its book value. With €94 million in cash and €4 million in net cash, along with robust margins and a 16% FCF yield, the company remains a solid investment opportunity. The target price adjustment to €25 from an earlier €31 is based on estimated free cash flow.