Kendrion develops, manufactures and markets high-quality actuator products for industrial applications (49% of FY23 revenues) and automotive (51%). The geographical spread of FY23 revenues was Europe 69%, the Americas 16% and Asia 15%.
As in Q323, Kendrion’s segments showed opposite trends in Q423 with Industrial Brakes hard hit by weaker economies in Germany and China and Automotive in recovery mode with 6% organic revenue growth. On 7% lower group revenues, EBITDA declined 14% with a 70bp lower margin of 8.6%. Kendrion expects market conditions to remain challenging in H124 but growth to return in H224 (based on its order book). It has taken measures to improve profitability, while optimising working capital. Its leverage ratio should reduce further in 2024.
Industrials |
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Industrials |
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Industrials |
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Industrials |
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Jeroen Hemmen
CFO
Joep van Beurden
CEO
Forecast net debt (€m)
130.3
Forecast gearing ratio (%)
N/A
% | 1M | 3M | 12M |
---|---|---|---|
Actual | 14.6 | 18.2 | (9.1) |
Relative | 11.2 | 5.7 | (24.3) |
52 week high/low | €19.6/€10.8 |
Market trends in Q423 were like Q323, with Kendrion’s Industrial segment under pressure and Automotive in recovery due to higher pricing and new projects. On 7% y-o-y lower revenues, EBITDA was down 14%, slightly below our expectations. Kendrion is now more confident in realising its FY25 targets (revenue of around €636m and EBITDA margin of 15%) as it has more visibility on the ramp up of new projects, while being bullish about its pipeline, based on electrification and clean energy trends. We have rolled our valuation forward by one year, which, coupled with higher EBITDA margin estimates, points to a value of €18.6/share (from €15.5).
Y/E Dec | Revenue (€m) | EBITDA (€m) | PBT (€m) | EPS (fd) (c) | P/E (x) | P/CF (x) |
---|---|---|---|---|---|---|
2022A | 519.3 | 57.4 | (39.7) | 143.57 | 9.5 | 3.9 |
2023A | 518.5 | 53.1 | 13.9 | 90.99 | 15.1 | 4.3 |
2024E | 542.0 | 62.8 | 26.1 | 144.81 | 9.5 | 3.3 |
2025E | 586.1 | 78.4 | 43.7 | 223.00 | 6.1 | 2.7 |