Report

voestalpine maintained at HOLD, TP EUR 19.5 - Cutting estimates and target price ahead of FY 19/20 results

voestalpine is due to publish its FY 19/20 figures on June 3. Having updated the earnings guidance in early April to EBITDA of over EUR 1.1 bn and EBIT of around EUR -135 mn we do not envisage major surprises from the release. We put the focus on net debt development and the managements perception of how substantially and lastingly economic and trading conditions will be impacted in the aftermath of the Covid-19 related lockdowns. In this respect the recovery trajectories of the automobile industry (ca. 34% exposure) and the O&G industry (~10%) are particularly relevant. Ahead of the release we have revisited our model and as a result of considerably reduced forecasts we cut the target price to EUR 19.5 from EUR 24.5 and maintain the HOLD recommendation. Despite factoring in a pronounced earnings recovery in FY 21/22e, the groups ROCE should fall well short of value generating territory. For the time being we see the expected FCF uptick as the main attraction. With the exception of P/B (arguably reflecting low return expectations, long-term fwd median 1.0x), current trading multiples do not appear compelling (long-term fwd median EV/EBITDA 6.1x, P/E 11x), in our view.
Underlying
Voestalpine AG

voestalpine is engaged in the production, processing, and distribution of materials made of steel and in research and development in the areas of metallurgy, metal processing, and materials technology. Co.'s steel division focuses on the production and processing of flat steel products. Co.'s special steel division is involve in tool steel and high-speed steel. Co.'s metal engineering division is engaged in turnout technology, rails and treated wire, and tubes. Co.'s metal forming division is involve in tube products and precision strip steel as well as pre-finished system components. Co.'s other activities include heavy plate production, a foundry, and a number of downstream processes.

Provider
Raiffeisen Bank International AG - Institutional Equity
Raiffeisen Bank International AG - Institutional Equity

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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