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
Target price: Kaufen
Target price on sight of: 12 Monaten
Last rating change:
Analyst: Mark Schüssler

Q2 prelims in line with expectations // FY24e guidance confirmed

Yesterday, Einhell released ad-hoc news revealing that sales between January and May 2024 amounted to € 478.2m (+11.6% yoy). The company further expects sales for H1'24 to be € 565m (+7.4% yoy; eNuW: € 562m) and EBT margin to be 8.5% (-10bps yoy; eNuW: 8.3%). Therefore, Q2 results should be in line with our expectations, showing healthy top and bottom line growth versus Q2’23 and Q1’24.

Management expects Q2 sales to grow by 6.9% yoy to c. € 295m (eNuW: € 292m), likely driven by ongoing strong demand for the company’s Power X-Change products (Q1'24: 50% PXC share), particularly pronounced in DACH, with PXC share up 13ppts to 62% in Q1'24. EBT likely increased by 4% yoy to c. € 25m (eNuW: € 24.3m), implying the margin slightly dropping 0.1ppts yoy to c. 8.6%, mainly due to operating leverage, offset by PPA effects with regards to the acquisitions in Canada and Thailand.

While the gross margin will likely be on par with or slightly below last year's figure due to easing but still noticeable cost inflation (eNuW: € 118m), personnel expenses should be elevated (eNuW: c. € 34m) as an increased employee base in combination with the acquisitions in Thailand and Vietnam weighed on operating profitability. Having said that, a H1’24 EBT margin of 8.5% still marks a considerable improvement to EBT margins pre-Covid (+2.3ppts from 6.3%) and a decent inventory management (c. -18% yoy to € 341m in Q1) should indicate fewer promotional activities going forward.

With that, Einhell confirmed its FY24e guidance of 6% sales growth yoy to around € 1,030m (eNuW: € 1,030m) and sees its EBT margin at the upper end (8%) of the 7.5-8% guidance corridor (eNuW: 7.9%). In our view, this continues to look achievable as the healthy sales growth and solid EBT profitability in Q1 and Q2 should provide confidence, aided by a less challenging H2’23 comparable base. The key margin drivers should be easing freight costs and raw materials prices as well as longterm currency hedging to avoid extreme fluctuations in purchase prices.

After two promising acquisitions in Thailand and Vietnam in 2023, a potential US market entry should provide the company access to the largest DIY market globally. Given that Einhell has a sound track record of expanding internationally via M&A, rolling-out its leading Power X-Change platform in this market should drive further market share gains. A key beneficiary of the structural transition towards cordless power tools, Einhell remains a BUY with an unchanged PT of € 227, based on DCF.

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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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