Semperit confirmed at BUY, TP EUR 30 - (Even) Strong(er) 2021 ante portas

We reiterate the BUY rating and raise the target price to EUR 30 from EUR 25 on the back of a further increase of our estimates (which we still do not regard as stretched). Sempermeds Covid-19 induced earnings bonanza gathered momentum in 3Q with EBITDA doubling vs. 2Q and we think that earnings could well double again qoq in 4Q. Importantly, Sempermed should be able to sustain its cruising altitude in the coming quarters. Following recent news-flow around successful trials of a vaccine (presumably a reason for the 20-25% share price corrections of the main Asian glove makers last month), the management made an effort to underscore that prices are not expected to correct before 2H 21 and that next years capacity is already entirely booked. These assumptions are the base for the initial 2021 guidance, which stipulates that the level of the 2020 result (EBITDA target range of EUR 200-225 mn) should be maintained or even exceeded. We find this a) remarkable at this early stage, which in turn suggests good visibility (not a given these days) and b) comforting for those concerned that a vaccine approval implies an abrupt end to the current blue-sky framework. The management once again confirmed to keep the medical business within the group at least until mid-2021, while reiterating the strategic divestment decision. We are of the opinion that the key challenge in the near future will be to balance out the CF optimisation from the operating business vs. the maximisation of the disposal price.