Azelis Return to organic growth has not been rewarded

In this note we come back to the 3Q24 results which were beside the FX headwind decent and showed a return to organic growth. For FY24 we lower our EBITA expectations, due to FX headwinds and lower acquisitional growth. This while the more important organic growth and gross profit margin improved. Our segment overview shows that across regions most end markets improved. We forecast that 4Q24 will be the first quarter to report organic growth in all regions since 3Q22. Furthermore, we highlight that Azelis improved the gross profit margins over the years regardless the overall product mix. We expect the discount with IMCD will decrease post 3Q24 results of IMCD given a similar FX impact and higher OpEx. Modest changes result in a DCF-based valuation of € 28 per share and thus reiterate our Buy rating.