Original-Research: Einhell Germany AG (von NuWays AG): Kaufen

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Original-Research: Einhell Germany AG - from NuWays AG

Classification of NuWays AG to Einhell Germany AG

Company Name: Einhell Germany AG
ISIN: DE0005654933

Reason for the research: Update
Recommendation: Kaufen
from: 25.04.2024
Target price: EUR 227.00
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Mark Schüssler

Q4 in line with prelims // solid FY24 guidance; chg.

Einhell released Q4 results in line with prelims, showing a slowdown versus
previous quarters. Group sales decreased by 5% yoy to EUR 216m, bringing full
year sales to EUR 972m (-6% yoy). In DACH, Einhell continued to experience a
somewhat muted consumer sentiment, explaining why regional sales declined
by 8.1% yoy. Meanwhile, both Western and Eastern Europe experienced healthy
yoy growth of 7.2% (Q3: 1.5% yoy) and 17.8% (Q3: 32.1% yoy), respectively,
while overseas markets experienced a pronounced contraction of 16.7% yoy
(Q3: 4.8% yoy), mainly driven by adverse currency translation effects
(relative weakness of Australian and Canadian dollar) as well as muted
consumer sentiment in Australia.

While the gross margin rose 2.8pp yoy to 43.2% supported by easing
supply-chain constraints and higher PXC share (44% of sales or +4pp yoy),
Q4 EBT fell by 31% yoy to EUR 12.6m, bringing full year EBT to EUR 75.4m (7.8%
margin vs. 8.5% in FY22). This largely resulted from (1) negative operating
leverage due to fewer orders by DIY chains (high inventories built up in
previous years) and (2) PPA effects from the acquistions in Canada and
Thailand (adjusted for these effects EBT margin would have been c. 8%).
Still, Einhell was able to exceed pre-pandemic levels (Q4'19: 4%) and
managed to significantly reduce working capital (-28% yoy) and thus boost
FCF generation in FY'23 to EUR 197m (eNuW: EUR 175m, +514% yoy), which should
indicate fewer promotional activity going forward.

The company issued a solid FY24 guidance with sales expected to grow by 6%
yoy to EUR 1,030m (eNuW: EUR 1,030m, eCons: EUR 1,039m) partially driven by an
easier comparable base as well as easing consumer sentiment in DACH (38% of
sales), along with overseas markets (26% of sales) likely benefiting from
the introduction / continued expansion of the Power X-Change platform (e.g.
Canada). The EBT margin is seen to come in at 7.5-8.0% (eNuW new: 7.9%,
eNuw old: 8.2%), implying an EBT of EUR 77-82m. This should be supported by
the sustained trend towards higher-margin Power X-Change products leading
to positive mix effects, offset by higher personnel expenses stemming from
acquistions in Vietnam and Thailand and higher marketing expenses. The
latter should strengthen Einhell's brand in preparation for entering new
markets through the acquisition of a smaller local DIY brand and gradually
replacing the assortment with best-in-class price/value PXC products.

Against this backdrop, valuation looks undemanding, trading at 9.6x PER 24e
and a 10.5% FCF yield.
BUY, PT EUR 227, based on DCF.

You can download the research here:
http://www.more-ir.de/d/29515.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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Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte.
Offenlegung möglicher Interessenskonflikte nach § 85 WpHG beim oben analysierten Unternehmen befinden sich in der vollständigen Analyse.
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The issuer is solely responsible for the content of this research.
The result of this research does not constitute investment advice
or an invitation to conclude certain stock exchange transactions.

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