Andritz confirmed at BUY, TP EUR 37 - Surprisingly strong profitability outlook for 2020e
Andritz's preliminary 3Q results and the more optimistic guidance for 2020e profitability (adjusted for one-offs) caught us and the market by surprise. We particularly liked the strong order intake in Hydro, underlying EBITA profitability improvement thanks to cost discipline and efficiency measures, and the 6.8% EBITA margin outlook (almost flat yoy adjusted for one-offs) for a pandemic-ridden year. Although one swallow does not make a summer, and the pandemic's second wave in large parts of Western economies rolling in, we plugged in the strong order intake and FY outlook into our forecast. We have also become more optimistic on hydro refurbishment in the mid-term, given increased climate targets and funding being limited to renewables assets in economic support mechanisms in Europe. We reiterate our BUY recommendation and slightly increase our target price to EUR 37 (EUR 36).Andritzis develops production systems and industrial process solutions for standard and specialized products. Co. maintains five business areas. Pulp and Paper provides technology and services for production of various grades of pulp and fiber for the manufacture of paper, board and tissue. Metals develops and manufactures plants for the production of cold-rolled carbon steel, stainless steel, and non-ferrous metals strip. Environment and Process provides products and services for mechanical and thermal solid or liquid separation. Feed and Biofuel develops and produces equipment for production of feed. Hydro supplies turnkey electromechanical equipment and services for hydro power plants.
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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