AMAG confirmed at HOLD, TP EUR 27 - Earnings inflection not in sight
In the aftermath of AMAGs 2Q 20 results release we have cut our earnings forecasts and thus reduce the target price to EUR 27 from EUR 30 while maintaining the HOLD rating. 2Q held up better than expected but the deteriorated outlook of the transport sector weighs on the groups shorter-term prospects, in our view. Thus, we think that a noteworthy earnings inflection is unlikely to materialise before FY 22e. Despite the Covid-19 base effect impacting the current year, we do not expect FY 21e group EBITDA to materially improve yoy. In absence of a substantial earnings inflection AMAGs capital returns will remain depressed. Higher downstream volumes driving up the capacity utilisation towards nameplate capacity coupled with an improving product mix would be prerequisites to generate economic value. The valuation remains demanding with FY 21e EV/EBITDA of 11.4x vs. a peer group median of 5.7x.AMAG Austria Metall is a holding company, engaged in the production of primary aluminum, as well as cast and rolled aluminum products. The metal division is responsible for the risk management and steering of the metal flows. The casting division recycles aluminum scrap to produce foundry alloys. Its product portfolio covers aluminum materials tailored to customer requirements in the form of ingots, sows and liquid aluminum. The rolling division is responsible for the production and sale of rolled products, and precision cast and rolled plates. The service division include facility management, energy supplies, waste disposal, and purchasing and materials management.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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