Kendrion — Strong recovery set to continue

Kendrion (AMS: KENDR)

Last close As at 20/06/2024

EUR14.50

0.72 (5.22%)

Market capitalisation

209m

More on this equity

Research: Industrials

Kendrion — Strong recovery set to continue

Kendrion’s results for the first quarter of 2021 showed a strong recovery after the declines in 2020, which were caused by the COVID-19 pandemic. Both the short-term and long-term outlooks are promising, driven by trends such as autonomous driving, electrification, emission reduction and industrial automation. We have slightly raised our estimates and expect a CAGR in EBITDA of 17% in 2021–23e. Kendrion’s valuation shows a discount of 8% to peers based on 2022e EV/EBITDA, which should gradually diminish when its financial targets for 2025 in terms of revenue growth and margins are met.

Johan van den Hooven

Written by

Johan van den Hooven

Analyst

Industrials

Kendrion

Strong recovery set to continue

Q121 results review

Industrial engineering

10 May 2021

Price

€23.5

Market cap

€351m

Net debt (€m) at 31 March 2021

110

Shares in issue

14.9m

Free float

49%

Code

KENDR

Primary exchange

Euronext Amsterdam

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(0.2)

21.1

114.9

Rel (local)

(1.4)

10.1

54.5

52-week high/low

€24.60

€8.84

Business description

Kendrion develops, manufactures and markets high-quality electromagnetic systems for automotive (52% of revenues) and industrial applications (48%). The geographical spread of revenues is Germany 39%, other Europe 30%, the Americas 15% and Asia 16%.

Next events

H121 results

25 August 2021

Analyst

Johan van den Hooven

+44 (0)20 3077 5700

Kendrion is a research client of Edison Investment Research Limited

Kendrion's results for the first quarter of 2021 showed a strong recovery after the declines in 2020, which were caused by the COVID-19 pandemic. Both the short-term and long-term outlooks are promising, driven by trends such as autonomous driving, electrification, emission reduction and industrial automation. We have slightly raised our estimates and expect a CAGR in EBITDA of 17% in 2021–23e. Kendrion's valuation shows a discount of 8% to peers based on 2022e EV/EBITDA, which should gradually diminish when its financial targets for 2025 in terms of revenue growth and margins are met.

Year end

Revenue (€m)

EBITDA*
(€m)

EPS*
(€)

DPS
(€)

EV/EBITDA
(x)

P/E
(x)

12/19

412

43.8

0.94

0.00

8.7

22.4

12/20

396

44.6

0.79

0.40

8.3

20.9

12/21e

438

54.1

1.10

0.55

8.7

21.5

12/22e

478

62.9

1.52

0.76

7.3

15.5

Note: *EBITDA and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Good organic revenue recovery in Q121

Kendrion experienced a strong start of 2021 despite the ongoing effects of the COVID-19 pandemic. Organic revenue was up 6% y-o-y compared with the decline of 12% in Q120. All three business groups reported good organic revenue growth, ie automotive 4%, industrial brakes 11% and industrial actuators & controls 5%. Driven by revenue growth, operating leverage and cost savings, normalised EBITDA showed a strong recovery of 18% to €16.1m, driving a solid improvement in margin of 150bp to 14%.

Positive trends will support acceleration of growth

Kendrion is positive about its short- and long-term outlooks. It expects strong underlying demand in its segments to continue in Q221 and the rest of the year (albeit dependant on national vaccination programmes). Longer term, Kendrion will benefit from multiple disruptive trends, such as autonomous driving, electrification, emission reduction and industrial automation. We have slightly raised our estimates after the good start of the year and now expect 10.5% revenue growth in 2021 versus 9% previously, with a stronger improvement in the EBITDA margin (+110bp versus 70bp previously). We expect sales growth of 8–10% in 2021–23e, and operating leverage and efficiency gains to result in an improvement in EBITDA margin of 240bp to 13.7% in 2021–23 (was 13.6%).

Valuation: Discount to peers

We value Kendrion using three different methods: historical multiples, discounted cash flow (DCF) and peer comparison. On our increased estimates, the updated blended average of these three valuation methods points to a value of €28.2 per share, up from €27.9 previously. Kendrion is currently valued at an 8% discount to peers based on 2022e EV/EBITDA, which could diminish over time when the company is able to accelerate growth and significantly improve margins.

Q121 results: Strong start to the year

Kendrion’s Q121 trading update showed a strong start of the year despite the ongoing impact of the COVID-19 pandemic. Revenues increased 5% y-o-y to €115.3m, with strong organic growth of 6%, driven by all three business groups. In Q120, the company faced an organic revenue decline of 12%, mainly caused by the COVID-19 pandemic. Automotive continued its recovery with organic revenue growth of 4%, despite the shortage in materials such as semiconductors, certain types of steel and some plastics. Growth was mainly driven by strong demand in passenger cars in Europe, whereas demand for commercial vehicles remained weak. Industrial brakes reported a stronger recovery with 11% organic revenue growth, broadly driven by all segments and geographies. Industrial actuators & controls reported 5% revenue growth, with strong growth in medical and machine safety offsetting a weaker performance in aerospace and textiles.

Growth continued in operations in China, with an easier comparison base as in Q120 this was the first region to be affected by COVID-19. Kendrion did not disclose the quarterly growth rate in China, but management commented that all three business groups showed growth excluding the reported growth in China. The company’s financial targets for 2025 assume ongoing strong growth in China of at least 20% per year. To fulfil high local demand, Kendrion is constructing a new plant in China, which will add 28,000m2 in capacity (doubling current local capacity). The new plant is on schedule to be operational in H122.

Normalised EBITDA recovered strongly by growing 18% to €16.1m, driving solid margin improvement of 150bp to 14%. Drivers of the improvement were a better gross margin (due to higher growth in the higher-margin industrial business), operating leverage and cost savings of €0.6m (full-year cost saving effect is estimated at €2.4m). Reported EBIT included restructuring changes of €0.2m and a tax claim receipt of €0.4m. With no material changes in financial expenses and tax rate, normalised net profit increased 36% y-o-y to €6.4m, or €0.43 per share.

Exhibit 1: Kendrion Q121 results

€m

Q120

Q121

% change

Revenues

109.7

115.3

5%

Gross margin

49.6%

50.1%

EBITDA normalised

13.7

16.1

18%

EBITDA margin

12.5%

14.0%

Depreciation

(6.6)

(6.3)

-4%

Amortisation, acquisition related

(1.1)

(0.9)

-14%

EBIT normalised

6.1

8.9

46%

EBIT margin

5.6%

7.7%

Restructuring and other items

(1.1)

0.2

EBIT reported

5.0

9.1

82%

Financial income and expenses

(0.7)

(0.7)

Pre-tax income

4.3

8.4

95%

Taxes

(1.3)

(2.5)

92%

Net profit

3.0

5.9

97%

Net profit normalised

4.7

6.4

36%

Shares outstanding, average

14.9

14.9

0%

EPS reported (€)

0.20

0.40

97%

EPS normalised (€)

0.31

0.43

36%

Source: Kendrion

Net debt increased from €103m at year-end 2020 to €110m in Q121 due to seasonal effects. Kendrion’s financial position remains strong with net debt/EBITDA of 2.3x, well within the covenant of 5.8x at the end of Q1 and the long-term covenant of 3.25x from 31 December 2021. The equity ratio increased 300bp y-o-y to 47%.

Estimates slightly raised

Kendrion expects the strong underlying demand in its segments to continue in Q221 and the rest of the year (albeit dependant on national vaccination programmes). IHS Markit expects a recovery in passenger cars in 2021 with 14% growth. The coronavirus pandemic creates an uncertain market environment in the short term, but in the longer term Kendrion will benefit from multiple disruptive trends, such as autonomous driving, electrification, emission reduction and industrial automation. The shortage of materials might have an impact in the short term, although management commented that there had been hardly any effect on profitability in the first quarter.

Kendrion remains committed to its financial targets for 2025, ie organic revenue growth of 5% or more on average pa and an EBITDA margin of at least 15%, which compares to the 11% reported in 2020. Assuming the company achieves its targets, this should result in revenues of at least €625m in 2025 and EBITDA of at least €94m in 2025.

We have slightly raised our estimates after the strong start of the year (see Exhibit 2). We still assume a recovery in 2021 and 2022 from the low level in 2020, which was caused by the pandemic. For 2023 and beyond, we continue to expect 7–8% revenue growth, driven by positive underlying trends, new projects and the doubling of capacity in China.

For 2021–23, we expect an improvement in the EBITDA margin of 240bp to 13.7% (was 13.6%), driven by operating leverage and efficiency gains. This reflects a CAGR in EBITDA of 17%. Financial expenses are expected to decline gradually in line with lower net debt over the next few years. The tax rate is expected to remain stable at around 25%, which reflects Kendrion’s country mix. This results in a CAGR in our estimated EPS of 34% in 2021–23e.

Exhibit 2: Change in estimates

€m

2021e

2022e

2023e

Old

New

Change

Old

New

Change

Old

New

Change

Sales

432

438

1.4%

475

478

0.4%

511

513

0.4%

EBITDA normalised

52.0

54.1

3.9%

61.9

62.9

1.6%

69.3

70.4

1.6%

EBITDA margin

12.0%

12.3%

13.0%

13.2%

13.6%

13.7%

EBITA margin

6.3%

6.7%

7.6%

7.8%

8.4%

8.6%

Net profit adjusted

14.8

16.4

10.3%

21.9

22.7

3.4%

27.5

28.3

3.0%

EPS adjusted (€)

0.99

1.10

10.3%

1.47

1.52

3.4%

1.84

1.90

3.0%

DPS (€)

0.50

0.55

10.3%

0.73

0.76

3.4%

0.92

0.95

3.0%

Source: Edison Investment Research

Capex was below depreciation in the first quarter, but management expects full-year regular capex to be in line with depreciation, or around €25m. In addition, capex for the new plant in China is estimated at €15m, of which more than half will fall in 2021.

Driven by improving results and relatively stable capex as a percentage of revenues, we expect Kendrion’s free cash flow generation to improve strongly over the next few years and to exceed €27m in 2023. Driven by increasing cash flow generation, we expect Kendrion’s financial position to further improve over the next few years. Net debt/EBITDA is expected to decline to 1.1x in 2023 and the equity ratio is expected to improve to 52% in 2023.

Kendrion’s balance sheet offers ample opportunities to finance further organic revenue growth and solid dividend payments. The company has a dividend policy of 30–50% of normalised net profit, but has paid around 50% in recent years.

Valuation

When valuing Kendrion, we look at three different methods: historical multiples, discounted cash flow (DCF) and peer comparison. Please refer to our recently published initiation note for more details.

We have not changed our assumptions for historical multiples, which show a discount of 15% on 2022e EV/EBITDA. Assuming a valuation in line with its historical multiples, as current profitability is in line with its historical average, this points to a value of €29.0 per share (versus €28.3 previously). For our DCF, we have not changed our assumptions, but our increased estimates have resulted in a slightly higher value per share of €29.4 versus €29.0.

The peer group multiples have not changed much since mid-April, resulting in the same potential value per share of €26.2 (was €26.3). The updated blended average of these three valuation methods points to a valuation of €28.2 per share, up from €27.9 previously.

Exhibit 3: Valuation methods Kendrion

Valuation method

Edison assumptions

Equity value per share (€)

Historical valuation

2022e EV/EBITDA in line with historical multiples

29.0

DCF

Terminal growth 1.5%, terminal EBITA margin 7.5%

29.4

Peer group

2022e EV/EBITDA in line with peers

26.2

Average value per share

28.2

Current share price

23.5

Upside/(downside)

20%

Source: Edison Investment Research

Exhibit 4: Peer comparison

Company name 

Currency

Share
price

Market cap (local FX)

EV/Sales (x)

EV/EBITDA (x)

EBITDA margin

2021e

2022e

2023e

2021e

2022e

2023e

2022e

Aalberts

45.95

5,056

2.0

1.8

1.8

10.9

9.8

9.5

18%

Emerson Electric

US$

93.72

56,204

3.3

3.0

2.8

14.5

13.0

11.8

23%

SKF

NOK

227.5

102,905

1.5

1.4

1.3

8.6

7.8

7.2

17%

TKH

44.5

1,837

1.5

1.4

1.3

10.5

8.5

7.6

15%

Industrial average

2.1

1.9

1.8

11.1

9.8

9.0

18%

BorgWarner

US$

52.23

12,527

1.1

1.0

0.9

7.3

6.5

5.7

15%

Continental AG

112.12

22,314

0.8

0.7

0.7

6.3

5.2

4.6

14%

ElringKlinger

14.02

888

0.9

0.8

0.7

7.5

6.4

5.2

13%

Hella

51.18

5,686

1.0

0.9

0.8

7.7

6.6

5.6

13%

Automotive average

1.0

0.9

0.8

7.2

6.2

5.3

14%

Universe average

1.5

1.4

1.3

9.2

8.0

7.1

16%

Kendrion

22.5

336

1.1

1.0

0.9

8.7

7.3

6.3

13%

Premium/(discount)

-29%

-30%

-32%

-5%

-8%

-11%

Assumed premium/(discount)

0%

0%

0%

0%

Implied value per share (€)

36.9

37.9

26.2

27.4

Source: Refinitiv, Edison Investment Research. Note: Prices as at 7 May 2021.


Exhibit 5: Financial summary

€m

2018

2019

2020

2021e

2022e

2023e

31-December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

INCOME STATEMENT

Revenue

448.6

412.4

396.4

438.1

477.5

513.5

Gross Profit

211.9

193.3

191.0

211.6

231.6

250.1

EBITDA normalised

58.5

43.8

44.6

54.1

62.9

70.4

EBITDA reported

49.7

38.1

40.2

52.1

61.9

70.4

Depreciation & Amortisation

(23.1)

(24.0)

(25.7)

(24.8)

(25.7)

(26.3)

EBIT normalised

35.4

19.8

18.9

29.3

37.2

44.2

Amortisation of acquired intangibles

(2.3)

(2.2)

(4.4)

(3.8)

(3.8)

(3.8)

Exceptionals (Edison definition)

(8.8)

(5.7)

(4.4)

(2.0)

(1.0)

0.0

EBIT reported

24.3

11.9

10.1

23.5

32.4

40.4

Net Interest

(3.1)

(0.9)

(4.4)

(3.8)

(3.3)

(2.8)

Participations

(0.1)

0.0

0.0

0.0

0.0

0.0

Profit Before Tax

21.1

11.0

5.7

19.7

29.1

37.6

Reported tax

(7.3)

(2.7)

(1.4)

(4.8)

(7.1)

(9.2)

Profit After Tax

13.8

8.3

4.3

14.9

21.9

28.3

Minority interests

0.0

0.0

0.0

0.0

0.0

0.0

Net income (normalised)

22.6

12.6

11.7

16.4

22.7

28.3

Net income (reported)

13.8

8.3

4.3

14.9

21.9

28.3

Average number of shares (m)

13.4

13.5

14.8

14.9

14.9

14.9

Total number of shares (m)

13.5

14.9

14.9

14.9

14.9

14.9

EPS normalised (€)

1.69

0.94

0.79

1.10

1.52

1.90

EPS reported (€)

1.03

0.62

0.29

0.99

1.47

1.90

DPS (€)

0.87

0.00

0.40

0.55

0.76

0.95

Revenue growth

-2.9%

-8.1%

-3.9%

10.5%

9.0%

7.5%

Gross Margin

47.2%

46.9%

48.2%

48.3%

48.5%

48.7%

EBITDA Margin

13.0%

10.6%

11.3%

12.3%

13.2%

13.7%

Normalised Operating Margin

7.9%

4.8%

4.8%

6.7%

7.8%

8.6%

BALANCE SHEET

Fixed Assets

246.4

244.8

299.6

305.3

306.9

304.7

Intangible Assets

116.1

115.5

158.1

154.4

150.8

147.4

Tangible Assets

113.6

111.4

118.7

128.1

133.3

134.5

Investments & other

16.7

17.9

22.8

22.8

22.8

22.8

Current Assets

128.9

113.2

129.5

135.7

150.4

166.5

Stocks

63.5

56.3

61.7

68.2

73.9

78.9

Debtors

48.0

42.9

47.2

52.2

56.9

61.1

Other current assets

7.2

6.9

7.6

8.4

9.2

9.8

Cash & cash equivalents

10.2

7.1

13.0

6.9

10.5

16.6

Current Liabilities

81.2

73.8

87.9

95.9

103.4

110.3

Creditors

41.7

41.3

44.0

48.6

53.0

57.0

Other current liabilities

27.3

26.9

31.9

35.3

38.4

41.3

Short term borrowings

12.2

5.6

12.0

12.0

12.0

12.0

Long Term Liabilities

112.0

80.7

137.8

132.8

127.8

117.8

Long term borrowings

78.5

48.9

104.2

99.2

94.2

84.2

Other long-term liabilities

33.5

31.8

33.6

33.6

33.6

33.6

Shareholders' equity

182.1

203.5

203.4

212.3

226.0

243.0

Balance sheet total

375.3

358.0

429.1

441.0

457.3

471.1

CASH FLOW

Op Cash Flow before WC and tax

51.4

36.1

40.6

52.1

61.9

70.4

Working capital

(8.3)

13.0

5.4

(4.3)

(3.6)

(3.1)

Tax

(4.2)

(6.1)

(1.3)

(4.8)

(7.1)

(9.2)

Net interest

(2.2)

(2.1)

(2.9)

(3.8)

(3.3)

(2.8)

Net operating cash flow

36.7

40.9

41.8

39.2

47.9

55.3

Capex

(31.4)

(20.0)

(16.0)

(34.3)

(31.1)

(27.9)

Acquisitions/disposals

(2.6)

0.1

(78.2)

0.0

0.0

0.0

Equity financing

(6.6)

23.3

0.0

0.0

0.0

0.0

Dividends

(5.8)

(8.1)

0.0

(6.0)

(8.2)

(11.3)

Other

(0.2)

(3.1)

(3.4)

0.0

0.0

0.0

Net Cash Flow

(9.9)

33.1

(55.8)

(1.1)

8.6

16.1

Opening net debt/(cash)

70.6

80.5

47.4

103.2

104.3

95.7

Closing net debt/(cash)

80.5

47.4

103.2

104.3

95.7

79.6

Source: Kendrion, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Kendrion and prepared and issued by Edison, in consideration of a fee payable by Kendrion. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Kendrion and prepared and issued by Edison, in consideration of a fee payable by Kendrion. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on Kendrion

View All

Latest from the Industrials sector

View All Industrials content

Research: Industrials

Schaltbau Holding — On track for strong margin recovery

Schaltbau Holding reported Q121 results that showed good revenue growth, despite the ongoing effect of the COVID-19 pandemic. Profitability improved strongly, with reported EBIT margin up 170bp to 4.9%. Cost saving and efficiency efforts will continue to drive higher profitability and we expect a further improvement in the EBIT margin to 7% in 2023, reflecting an EBIT CAGR of 26% in 2021–23. Schaltbau’s valuation offers re-rating potential now that it is on the verge of restoring profitability.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free