Classification of NuWays AG to INDUS Holding AG

Company Name:	INDUS Holding AG
ISIN:	DE0006200108
Reason for the research:	Update
Recommendation:	Buy
from:	04.11.2024
Target price:	EUR 34.00
Target price on sight of:	12 months
Last rating change:
Analyst:	Christian Sandherr

Case fully intact despite PW; chg. est.

Topic: On Thursday, INDUS released its preliminary Q3 sales and EBIT figures in line with our estimates. Further, due to non-cash goodwill impairments, the company revised its FY24e EBIT guidance.

Impairment of goodwill and intangible assets: Due to the annual assessment, INDUS had to reduce the book value of goodwill and other intangible assets in the amount of € 5.2m in the Infrastructure segment and € 1.5m in the Materials segment. The need for these impairments resulted from reduced forecasts of future cash flow for the two units.

Preliminary Q3 sales came in at c. € 441m (eNuW: € 445m), a slight decrease of c. 4% yoy due to a challenging macroeconomic environment. Reported EBIT remained roughly unchanged yoy at a solid € 31.8m (eNuW: € 30.8m). However, adjusting for impairments of € 6.7m in Q3’24 and € 17.6m in Q3’23 due to higher interest rates, EBIT decreased by 22.4% yoy.

FY EBIT guidance revised: While INDUS confirmed its FY24e top-line and FCF guidance of € 1.70-1.80bn and € 110m, they reduced their EBIT forecast to € 115-125m (previously: € 125-145m) due to impairments. However, the guidance looks plausible in our view as INDUS has achieved by now c. 75% of the lower end of the sales guidance in the first three quarters while the situation has improved already compared to H1’24 in terms of sales. Moreover, the revised EBIT outlook implies an EBIT margin of 5.1% in Q4’24e at mid-point, which looks conservative to us after 7.5% in 9M’24.

All things considered, this is rather positive news. Preliminary results are in line with our estimates, despite the € 6.7m impairment. Even though INDUS decreased its FY EBIT outlook due to impairments, it is a non-cash expenses and hence it will not affect FCF. Further, the company reiterated its FCF guidance of € 110m (eNuW: € 114m), which implies a strong FCFY24e of c. 10%.

Therefore, we reiterate our BUY rating with an unchanged PT of € 34 based on FCFY24e and confirm the stock as one of NuWays’ Alpha Picks.

You can download the research here: http://www.more-ir.de/d/31169.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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