Original-Research: MAX Automation SE (von NuWays AG)

Original-Research: MAX Automation SE - from NuWays AG

Classification of NuWays AG to MAX Automation SE

Company Name: MAX Automation SE
ISIN: DE000A2DA588

Reason for the research: Update
Recommendation: Kaufen
from: 19.04.2024
Target price: EUR 8.20
Target price on sight of: 12 Monaten
Last rating change: 
Analyst: Konstantin Völk

Positive long-term prospects for Vecoplan and bdtronic
Topic: In recent years, two of the current six portfolio companies
(continuing operations only) became increasingly important. These two
companies, bdtronic and Vecoplan, accounted for 71% of FY23 sales.
Enough reason to have a closer look at their prospects.
Vecoplan: As a global specialist for shredding, conveying, and processing
of raw materials in the recycling industry, Vecoplan can benefit from the
latest EU regulation. Until today, a lot of waste in the EU is exported to
third countries like Turkey, Indonesia, and Malaysia. In February 2024, the
European Parliament adopted tougher rules for waste shipments. Plastic
waste exports to non-OECD countries will be prohibited, while those to OECD
countries will be subject to stricter conditions. This forces EU member
countries to adopt better recycling strategies benefiting demand for
Vecoplan’s products. Vecoplan showed a dynamic revenue growth of 10% p.a.
over the last five years. We expect sales to grow by 6.0% p.a. until 2030e
with low double-digit EBITDA margins (eNuW), outpacing the growth of the
global waste management market of 5% according to Polaris Market Research.
Bdtronic: In 2023, the EU banned the sale of new CO2-emitting cars by 2035,
including petrol and diesel-driven cars, which increases the demand for
electric vehicles. In addition, major automotive manufacturers set internal
electrification targets. For instance, Volkswagen aims for a fully electric
production by 2033 within Europe. With 2/3 of bdtronic’s sales coming from
the EU, this could have a material impact on its impregnation segment.
Bdtronic’s trickle impregnation machines used for the impregnation of
electric motors are sold to Tier1-suppliers and OEMs and are suited for
large scale production. The strong demand for bdtronic’s products has
already shown up in the numbers with a five-year revenue CAGR of 14% and a
similar development in order intake. We expect bdtronic to grow by 9.4%
p.a. until 2030e with EBITDA margins north of 15% (eNuW).
Mind you, in addition to the positive operating performance, a successful
divestment of the subsidiary MA micro, which is part of discontinued
operations (company news 08.09.2023) should be a notable share price
catalyst, as it is seen to underpin that the value of the “parts” clearly
exceeds the current Enterprise Value of the group (eNuW). A strategic buyer
could be willing to pay at least 10x EBITDA for this highly profitable and
return-rich speciality business, implying a purchase price of more than €
93m (eNuW). Reiterate BUY with an unchanged € 8.20 PT based on DCF.

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