Aluflexpack cut to HOLD, TP CHF 22 - An adequate shield in current times, but fairly priced

In the aftermath of the FY 19 results release we downgrade Aluflexpack to HOLD from BUY with an unchanged target price of CHF 22. Figures essentially lived up to our estimates, as did the groups financial targets for FY 20e calling for revenues of EUR 220-230 mn and adjusted EBITDA of EUR 32-35 mn. However, for the time being these suggest no upside to our unchanged estimates of EUR 229 mn and EUR 35.5 mn, respectively. From our point of view the investment case as it was presented ahead in the wake of the IPO as fully intact. The group capitalises on the demand drivers for flexible packaging with a focus on attractive niches, pushes ahead investments into organic expansion (incl. major capacity increase for stand-up pouches), optimises production processes and generates scale effects. The M&A-driven expansion did not materialise in 2019 but remains an integral part of the strategy. However, bearing in mind the current environment, we think acquisitions might occur rather in 2H. Bottom line, we argue that these attractions are basically fairly discounted in the share price, in our view. Having plummeted from CHF 22 on March 10 to a low of CHF 12 on March 19, the stock has since gained 75%. Ytd the stock has outperformed the Swiss Performance Index (SPI) by about 20% and the STOXX Europe 600 by roughly 30% (in local currency terms).