Inbox: RCB kürzt Rosenbauer-Kursziel

Akt. Indikation:  45.40 / 46.00
Uhrzeit:  16:54:50
Veränderung zu letztem SK:  -1.08%
Letzter SK:  46.20 ( 0.87%)

We cut the target price to EUR 53 from EUR 58 and maintain the HOLD rating. In the aftermath of the 2Q results (profit warning was released two weeks before) we cut our earnings forecasts substantially. 2017 EBIT margin should plummet to about 3% according to the guidance (we calculate an underlying margin of ca. 4%, still the lowest level on our record), partly due to non-recurring charges, although the bulk of the burden stems from operational issues such as lower capacity utilisation and a weaker product mix. The guidance suggests that in 2H, apart from one-off items falling away, also the underlying business should improve sequentially. However, the fact that Rosenbauer has been struggling to reclaim historical profitability levels for several years now is more than ever evident. Although various cost-cutting and streamlining measures have been introduced, they did not translate into an inflection point so far, also with regard to cash conversion. We expect the new management team (CTO and CSO on Board, new CFO to follow in February) to introduce further efforts but acknowledge that more time will be needed until they can be presented to the market. On occasion of the 2Q figures management comments regarding the cost-cutting efforts were rather general, in our view, such as further reduction of man hours in vehicle assembly, adjustment of capacities (cessation of rented facilities), without attaching a concrete cost savings potential. We think that price pressure in the industry remains a big uncertainty, as anecdotal evidence suggests that some competitors are willing to accept even negative margins in tenders, thereby naturally exerting pressure also on Rosenbauers pricing strategy and limiting the cost savings retention. Summing up, while Rosenbauer sustains its premium position in the sector that is also mirrored by the Concept Fire Truck, we recommend staying on the sidelines for the time being as the risk-reward profile is not yet attractive enough. We are not fully convinced that the earnings revision cycle has already bottomed out (except for 2017e, although we see downside risk to the dividend) and see limited surprise potential in the short run. Moreover, our analysis suggests that the share price still discounts a decent earnings recovery, with a roughly 6% margin to be achieved in the medium term.