13.09.2017

Zugemailt von / gefunden bei: Baader Helvea (BSN-Hinweis: Lauftext im Original des Aussenders, Titel (immer) und Bebilderung (oft) durch boerse-social.com aus dem Fotoarchiv von photaq.com)

ANDRITZ - (Buy/TP EUR 57.00)

Our conclusion

    The key focus of ANDRITZ’s Capital Market Day was on the company’s IIOT activities all over the group (and particularly good achievements at P&P). ANDRITZ is definitely already in an advanced position, offering its customers all kind of plant optimization and operation solutions, predictive maintenance applications as well as a user friendly e-shop for spare parts under its METRIS brand for digital solutions. During the business update CEO Dr. Leitner emphasized the excellent prospects for the P&P business. Demand at Hydro and Schuler remains muted, while Separation is now on a good track. ANDRITZ did not comment on business trends in 3Q17 and on FY17 expectations. Nevertheless, we had the impression that order intake improved following the disappointing 2Q and no negative surprise in terms of profitability is ahead.

    Following the recent share price slump, we are reiterating our Buy rating for ANDRITZ. The overall business model is intact, even considering that a pick-up in Hydro investments might take some time. The profitability risk for ANDRITZ is limited given the ongoing strong service and upgrade business and the company’s pricing discipline. ANDRITZ’s valuation looks attractive with an adj. P/E 18E of below 15x, an EV/EBITA multiple of 9x and a dividend yield of 3-3.5%.

  Hydro Power: Apart from the generally somewhat lower market volume compared to the industry peak in 2007-2011 and the usual fluctuations with regard to large projects, ANDRITZ has lost market share in recent years (17% in 2015, 21% in 2016 vs. 23% long-term average). This is in particular due to the weakness of Hydro Power markets in Europe, where ANDRITZ is traditionally strong, while the company’s position is quite weak in more active markets like China, North America and Africa. ANDRITZ is trying to improve its market position by shifting capacities to China and India to cover the growing Asian markets locally. ANDRITZ is seeing good potential in the area of pumped storage projects, not least in China, where the company recently got a EUR 70mn order and is expecting an increasing market share for larger projects. Based on an average EUR 6.0bn global hydro power equipment market, a return to 23% market share (with potential for improvement) and additional approx. EUR 250mn volume with pumps and generators ANDRITZ’s annual Hydro business potential amounts to more than EUR 1.63bn. Given the increasing service share and overall pricing discipline ANDRITZ confirmed its long-term margin target of 8.5-9.0%

    Pulp & Paper is still experiencing good project and investment activity. While presumably no big pulp mill project will be placed in 2017, ANDRITZ expects at least one big order for 2018 and further major projects for 2019 and 2020 given a huge number of planned production starts in 2020-2022 and following years. In view of the good market environment ANDRITZ is expecting the current strong profitability level to be sustainable and increased its long-term margin target from 7-8% to >8%.

    Metals is suffering from very low investment activity in the Schuler business. Schuler is highly dependent from premium press lines for German OEMs, while the company is not present in the bigger B-segment. Schuler is now focusing on addressing this segment (potentially together with Yadon) to improve its growth potential. In view of the potential margin dilution as well as a difficult market environment for steel-related business, ANDRITZ has lowered its long-term margin target for Metals from 7-8% to 6-7%.

    The positive trend in order intake at Separation continued in July and August and the segment will experience increasing sales in 2H17 and is confident regarding ongoing growth in the years to come. Consequently, the margin is further improving and therefore, ANDRITZ regards its long-term margin target of 8-9% as achievable (but not before 2019). ANDRITZ might strengthen this business area via acquisitions.

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