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Original-Research: INDUS Holding AG - from NuWays AG

13.11.2024 / 09:01 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
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Classification of NuWays AG to INDUS Holding AG

Company Name: INDUS Holding AG
ISIN: DE0006200108

Reason for the research: Update
Recommendation: Buy
from: 13.11.2024
Target price: EUR 34.00
Target price on sight of: 12 months
Last rating change:
Analyst: Christian Sandherr

Final Q3 results out // 2nd buyback offer announced; chg. est.

Topic: INDUS released its final Q3 numbers in line with preliminary results.
Even more importantly, the company announced a public buyback offer in the
period from 12-25 November 2024 up to EUR 15.2m.

To recap: Q3 sales decreased slightly by 3.6% to EUR 443m due to a challenging
macro environment and low order backlog. Reported EBIT remained roughly
unchanged yoy at a solid EUR 31.8m with a 7.2% EBIT margin. However, adjusted
for impairments of EUR 6.7m in Q3'24 and EUR 17.6m in Q3'23, EBIT decreased by
22%. Personnel costs increased slightly by 0.6% yoy to EUR 129.4m despite a
lower headcount (-1.6% yoy of continuing operations) due to a notable rise
in wages and salaries. Cost of materials increased 1.4% yoy to EUR 195m with a
1.3pp increase in the cost ratio from a low comparable base.

Order intake remained unchanged yoy at EUR 392m (EUR 391 in Q3'23) but on a low
level due to a weak economic situation in the metal production and
processing sectors. This leads to an order backlog of EUR 678m (vs. EUR 711m end
of FY23). While the demand situation stopped declining and consolidated now
on a low level (EUR 1,220m order intake 9M'24 vs. EUR 1,230m in 9M'23), the book
to bill ratio is still slightly below 1.00 (0.95 in 9M'24). However, we
estimate that INDUS has already overcome the low point, and we should see
successive improvements for FY25e.

Buyback offer announced: already in February, INDUS acquired 1.1m shares at
a price of EUR 23 per share in a public buyback offer, amounting to 4.1% of
its share capital, which are still held as treasury shares. The company
announced now a second buyback offer at EUR 21.65 per share for 0.7m shares in
the period from 12-25 November. In addition, INDUS intends to buy for up to
EUR 5m, but no more than 0.2m shares on the open market between 2 December
2024 at the earliest and until 16 May 2025 at the latest. If both programs
are conducted successfully, INDUS would hold up to 7.4% in treasury shares.
According to management, shares from the second tender offer and the open
market transaction will be cancelled. This is positive news, as the stock is
clearly undervalued in our view and hence repurchasing shares offers an
attractive return on invested capital compared to other capital allocation
choices.

Strong FCF: management confirmed the FCF outlook for FY24e of above EUR 110m.
INDUS achieved EUR 71.9m FCF in 9M'24, EUR 34.2m lower than last year but still
on a solid level. Further, FCF in 9M'23 includes a positive one-time effect
of EUR 14.4m from a property sale. The FY target of EUR 110m looks plausible in
our view (eNuW: EUR 115m), as working capital tends to come down in Q4 due to
seasonal effects. With that, INDUS should deliver a strong FCFY'24e of c.
10%.

2025 outlook: According to management, the geopolitical and macroeconomic
challenges should continue to exist in FY25e. However, compared to Q1'24,
the situation has already visible improved. Thus, we expect to see a
moderate top-line improvement for FY25e of 5.4% to EUR 1810m, of which EUR
40-50m should be contributed from M&A acquisitions in FY24e and FY25e as
stated by management. Further, we expect EBIT to improve disproportionately
to EUR 150m in FY25e (eNuW) due to less expected impairments and macroeconomic
improvements.

Nevertheless, INDUS has shown resilience even in an adverse business
environment. On top of that, INDUS is trading at only 8x forward P/E (eNuW),
offers an expected dividend yield of 5.8% (eNuW FY24e: EUR 1.2 per share), and
delivers a strong FCFY24e of c. 10% (eNuW). Hence, we keep INDUS as one of
NuWays' Alpha Picks and reiterate BUY with an unchanged PT of EUR 34, based on
FCFY'24e.

You can download the research here: http://www.more-ir.de/d/31299.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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2028595 13.11.2024 CET/CEST

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