RCB-Research: "voestalpine reported in-line 1Q 14/15 results with only minor deviations vs. our and consensus estimates. The full-year outlook of slightly higher operating earnings has been confirmed. However, in the wake of the recent market sell-off the stock has fallen markedly and meanwhile has reached reasonably attractive levels, currently offering approximately 20% upside to our unchanged target price of EUR 37. We have trimmed earnings forecasts fractionally (2014/15-16/17e by 1-2%) and have slightly increased capex, which however is compensated for by the application of lower risk-free rates across our coverage universe. Given the upside potential we upgrade the recommendation to BUY from HOLD. 1Q figures were no game changer, in our view. voestalpine remains a quality play in the steel sector with sustained basically full utilisation rates and a strong downstream business. Lower raw material prices and the scope for additional orders in connection with the South Stream project bode well for the steel operations.
 

Solid 1Q performance: voestalpines 1Q 14/15 results were broadly in line with our and market forecasts. Revenues declined 2% to EUR 2.83 bn (vs. RCBe EUR 2.92 bn). Group EBITDA and EBIT of EUR 364 mn and EUR 218 mn, respectively, were basically flat yoy and fell just 3% shy of RCBe. Accordingly, the EBIT margin remained unchanged at 7.7%. Due to a better than expected financial result voestalpines net income rose by 13% to EUR 133 mn (RCBe EUR 128 mn) - slightly more than assumed and equivalent to EPS of EUR 0.77. Steel EBIT of EUR 57 mn (-2% yoy), Special Steel EBIT of EUR 61 (-6%) and Metal Engineering of EUR 80 mn (-1%, revenues down 6% due to closure of rail production in Duisburg) were fully in line with RCBe of EUR 57 mn, EUR 62 mn and EUR 80 mn, respectively. A minor deviation was observed at Metal Forming (-3% to EUR 45 mn vs. RCBe EUR 48 mn).
 

Minor changes to estimates: We have made minor changes to our forecasts, i.e. a roughly 1% reduction of the top line forecasts and a 2% reduction of EBIT projections for FY 14/15-16/17e. The new EBIT forecasts stand at EUR 874 mn, EUR 1,003 mn and EUR 1,087 mn, respectively. Among the segments we have fractionally lowered Metal Engineering and Special Steel and assume a higher consolidationline. Our new EPS estimates stand at EUR 3.06 (3.10), EUR 3.69 (3.77) and EUR 4.09 (EUR 4.13), respectively. 
 
Blended valuation yields TP of EUR 37: The total-return TP of EUR 37 is derived from an equally weighted blend of DCF (perpetual growth 1%, terminal EBITDA margin 13%) and EV/CE (normalised post-tax ROCE 8.1%) models. Trading at P/Es of 10.1x and 8.4x for 2014/15e and 2015/16e, respectively, the share is priced at a pronounced discount to the sector, thereby not reflecting voestalpines intact growth prospects, in our view."

voestalpine

voestalpine: Letzter Schlusskurs (Euro): 31.025, das ist der 99. beste von 150 Handelstagen (%-Perf.) , das ist der 143. beste von 150 Handelstagen (Preis) , Periodenhoch am 15.01.14 (Kurs: 36.285 Δ% -14.5), Periodentief am 14.03.14 (Kurs: 28.780 Δ% 7.8), 150 Handelstage, davon ↑ 68 → 0 ↓ 82 , Performance Periode: -11.18 %, Umsatz '14/'13: 108 %

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