Original-Research: Nabaltec AG (von NuWays AG): Buy

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Original-Research: Nabaltec AG - from NuWays AG

12.03.2025 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
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Classification of NuWays AG to Nabaltec AG

     Company Name:                Nabaltec AG
     ISIN:                        DE000A0KPPR7

     Reason for the research:     Update
     Recommendation:              Buy
     from:                        12.03.2025
     Target price:                EUR 25.00
     Target price on sight of:    12 months
     Last rating change:
     Analyst:                     Christian Sandherr

Strong Q4 prelims; FY25 guidance conservative

Preliminary Q4 sales stood at EUR 45.4m (in line with expectations), a 2.7%
yoy increase thanks to improved demand for core products, offsetting the
still weak Specialty Alumina segment and lacklustre boehmite demand. FY24p
sales came in at EUR 203.6m, a 1.8% yoy increase.

Q4 EBIT came in at EUR 5.5m, up 6% yoy and notably above our estimate of EUR
2.2m, implying a margin of 12.1%. The drivers behind this were the improved
top-line but also positive implications from improved raw material costs.
FY24p EBIT came in at EUR 22.3m (+22% yoy) with an implied 10.8% margin. With
the better than expected EBIT, the operating cash flow should have come in
at a strong EUR 35-40m.

The gap filler is growing in importance. Sales from the white powder, that
improves thermal management capabilities of adhesives used in EV batteries,
reached EUR 10m in FY24 (+100% yoy). For FY25e, we model another 30% increase.
Once the current capacity expansion is completed, Nabaltec will be able to
produce EUR 40m worth of product annually.

Boehmite remained on the sideline as FY24 sales decreased 25% yoy to only EUR
12.5m due to lacklustre EV demand across Europe and the absence of notable
cell and separator production capacities.

Cautious FY25 guidance. Management expects to grow FY25 sales by 3-5% (eNuW:
7%) while achieving an EBIT margin of 7-9% (eNuW: 10.3%). As the mid points
came in below our estimates, we believe the guidance to be conservative due
to management's general cautiousness early in a year, opposing effects on
the cost side (lower alumina prices partially offset higher electricity and
natural gas prices as well as increased labour costs) and overall selling
price increases (eNuW: ~ 3.5%).

Potential tailwinds from Germany's EUR 1tn spending bazooka. On March 4th,
election winner Friedrich Merz from the Christian Democrats (CDU) as well as
the Bavarian Christian Social Union (CSU) and the Social Democrats (SPD)
discussed a EUR 500bn special fund for infrastructure investments over the
coming
10 years, next to a sizeable fund for defense. It is planned to pass the law
before the new government takes office. With 25% of group sales being
directly tied to Germany (Europe 76%) and construction being the most
important end market, this could turn into a notable tailwind.

Slight defense exposure but potential for more. Within the Specialty Alumina
segment, Nabaltec also produces ceramics used in ballistic plates currently
used in heavy vehicles and partially on naval vessels.While the sales
contribution in FY24 should have been in the low single-digit euro million
range, we see the potential for notably more during the mid-term, depending
on defense spending decisions.

Valuation remains unjustified low. Nabaltec is trading at 16% discount to
its book value, while the company offers a strong balance sheet and good
free cash flow yield, even in a macro-economically challenging year. We
continue to regard to stock to be mispriced and confirm our BUY rating with
an unchanged EUR 25 PT.

You can download the research here: http://www.more-ir.de/d/31952.pdf
For additional information visit our website:
https://www.nuways-ag.com/research-feed

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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2099132 12.03.2025 CET/CEST

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