R&S Group : Valuation of the transformer pure play has become attractive again

R&S Group is a pure play in the transformer business (focus on distribution up to medium-sized power transformers) with a strong presence in its home market Switzerland, but also in Poland, Italy, and increasingly in Germany as well as other parts of Europe. The group will benefit from structurally growing electricity grid investments leading to mid-teens adj. EBIT growth in the next couple of years. In light of the recent share price correction (~-30%), we initiate coverage at Outperform with a target price of CHF 34, offering 27% upside.