30.06.2017

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

We upgrade RHI from Hold to Buy and increase our target price from EUR 23.00 to EUR 40.00. The new target price is based on the assumption that the takeover will take place as indicated. In this scenario, our base case, we calculate that the new RHI Magnesita can achieve an EPS of at least EUR 4.00 per in 2020. In a best-case scenario, EPS could exceed EUR 5.50per share. With the listing on the London Stock Exchange, expected for November, we expect attention for the new market leader in the international refractory market to grow.

    We waited for the first major step, approval from the EU commission, before issuing our new recommendation. This may appear to be late, given the performance of the shares so far. However, the entire process will still take time, with the extraordinary meeting of RHI shareholders, the migration to the Netherlands, the listing in London, and the mandatory offer for the remaining Magnesita shares still pending. Not to mention the integration of the two companies, which could lead to net synergies of approximately EUR 70mn. All these steps still bear some risk that the process could be delayed or could result in higher than expected costs.

    We have viewed the operational logic of such a deal positively. The new company can optimize production processes, reduce working capital and net debt significantly by 2020, with the expected FCF of more than EUR 100mn per annum.

    Our new target price is based on a rough calculation of the possible net profit of the combined company at the end of the merger process. The figures below are still based on a stand-alone RHI. However, even on a stand-alone basis, taking the figures for 2018 indicates that a P/E of 14 is not completely out of range.

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