Wacker Neuson - Improving prospects in key end-markets
Following a weak FY16, Wacker Neuson (WAC) returned to its profitable growth path in 9M17, with sales up 12.7% y-o-y and adjusted EBIT margin up 300bp y-o-y to 9.5%. This was driven by the upturn in both construction and agricultural machinery markets. Management raised its FY17 sales guidance to the upper end of €1,450-1,500m from €1,400-1,450m in March. Solid balance sheet headroom (net debt/EBITDA FY17e at 0.9x) allows for further investments into extending WAC’s global reach (medium-term target of 40% sales outside Europe vs 25% in FY16). The shares are trading on a FY17e P/E of 20.7x, implying a c 18% discount to the peer average.Wacker Neuson is a holding company. Through its subsidiaries, Co. is a manufacturer of light and compact equipment. Co. has three business segments: light equipment, compact equipment and services. Co.'s light equipment business segment covers the manufacture and sale of light equipment weighing up to three tons in the business fields of concrete technology, compaction and worksite technology. Co.'s compact equipment business segment covers the manufacture and sale of compact equipment weighing up to 15 tons in the fields of excavation technology and material handling. Co.'s services business segment includes its spare parts, maintenance, financing and used equipment business activities.
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