Waberer’s - Strategy Started To Be Executed

• We remain Buy-rated on Waberer’s, however, we lift our TP to 3,990 HUF/sh from 3,400 HUF/sh, leaving an 84% upside potential to the previous closing. The Management has started to execute strategy, thus we see signs of gradual operational improvement. Given that the management guided ambitious mid-term goals, we upgraded our forecasts, but we modelled lower earnings than the guidance due to deteriorating macro outlook.
• Long-term story: Waberer’s is well on track to gain efficiency and to reach higher earnings. Positive impact of investments is expected to be significant both in absolute and margin terms. Compared to our previous forecast, Group EBIT margin could widen by around 1%pt by 2025 if the management delivers ambitious goals. The Co. will save millions of euros on (1) investing in new technologies, (2) developing own warehouse and (3) expanding service complexity. In addition, Waberer’s has ample liquidity, which enables them to weather even an economic disaster after the company issued a EUR 111mn 10Y fixed bond in April at attractive price (not disclosed, but assumed at around 4%).
• Short-term outlook: According to the management, the Co. hasn’t faced significant decrease in demand since March and they are continuously able to pass on fuel price increases to customers. Importantly, the RU-UKR war hasn’t affected Waberer’s materially so far. Having said that, an economic downturn, which is widely expected, could lead to volatile order flow. This would probably create a challenging environment.
• We expect Waberer’s to reach net profit of EUR 16mn and 23mn in 22F and 23F, respectively, implying ‘22 and ’23 P/E of 6.0x/4.2x, respectively, based on our estimates. We hold our view that the Co. is dirt cheap, implying a massive difference between our TP and the offer price of 2,336 HUF/sh made by qualified shareholders recently.