TKH GROUP NV : Massive value creation in the works…if executed well
We upgrade TKH from Neutral to Outperform with a DCF/SOTP based price target of €48 per share. TKH has decided to divest Electrification (EF), Digitization and other non-core units, with the largest divestments expected in the next 6 to 18 months. We estimate the proceeds to be c. € 640m, of which the vast majority will be returned to shareholders via share buy backs. Together with regular dividend of the core activities, this implies a cash return (on average) in the next three years of € 7 per share or 20%. The remaining activities, a top 5 global Machine Vision (MV) player and the global market leader in tire manufacturing automation (TMA) will be valued at higher multiples than TKH previously with no or limited conglomerate discount. Key catalysts: divestments, share buy backs, profitability uptick EF, order intake improving TMA. Key risk: execution of the divestments. In addition, the Q3/Q4 2025 results may still be weak due to headwind in Smart Manufacturing and known issues in Smart Connectivity.TKH Group creates and supplies Telecom, Building and Industrial Solutions. Telecom Solutions develops, produces and supplies systems ranging from outdoor infrastructure for telecom and CATV networks through to indoor home networking applications. Building Solutions develops, produces and supplies solutions in the field of electro-technology ranging from applications within buildings through to technical systems that - combined with software - provide solutions for the care and security sectors. Industrial Solutions develops, produces and supplies solutions ranging from specialty cable, "plug and play" cable systems through to integrated systems for the production of car and truck tires.
Oddo Securities provides securities brokerage and research services. The company offers equity, economic, and derivatives research and credit analysis services. It focuses on insurance, automotive, building materials, pharmaceuticals, telecommunications, information technology, and agri-food industries.
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