profine : Buy recommendation: Good yield opportunity at acceptable leverage

profine is offering currently a YTW of 7.9% at a net leverage of 3.7x, which we see not increasing further (peak in FY 25).
After the company missed the refinancing window end of 2024, we believe it could opt more opportunistically next time, which would further improve the yield profile of the paper.
The company has gone through the worst in terms of the construction and remodeling market, we believe, and from here we expect gradual earnings improvement, partly driven by demand from more prosperous regions outside Germany/Europe. The German market is rather in stabilisation mode.
The tariffs situation is less of a concern for us as the US market will be self-supporting over the medium-term. The PVC market environment is currently not negative for the company. Only some PVC players leaving the market or further consolidation could alter this picture.
Levered free cash flow will likely see a small cash burn in FY 25 but should improve in the following years.
We affirm our Stable Credit Opinion and change our recommendation to Buy (vs. Neutral).