Topic: After an already strong FY24e, Einhell should in our view also in FY25e convince with solid sales growth and a further margin expansion.

Sales are expected to increase to € 1,145m in FY25e due to a strong demand for Einhell’s Power X-Change products and steadily increasing market share in Einhell’s core markets. In H1’24, Einhell was already by far the largest player for cordless garden tools with a market share of 39% in Germany (vs. 36% in FY23) and 19% for cordless tools (vs. 17% in FY23). Next to the Western European region, Einhell Australia is also growing fast with € 148m sales in 9M’24 (vs. € 126m in 9M’23), accounting for c. 18% of total sales.

Furthermore, we expect Einhell to increase its EBT margin to 8.6% (eNuW) next year thanks to the increasing share of PXC products (9M’24: 50% share; +5ppts yoy), lower freight costs, a decrease in headcount and positive operating leverage.

Going forward, Einhell should benefit from the structural trend towards cordless battery-powered tools thanks to (1) high convenience of cordless tools compared to conventional tools as they are more flexible, offer a high level of safety and have less emissions and maintenance. (2) A rising technological capability of Li-Ion battery systems, including improved recharging speed, durability, energy management and maximum load. (3) Reasonable pricing of Li-Ion battery systems thanks to mass market production, making powerful battery systems applicable for a wide range of semi-professional DIY products.

On top of that the current valuation of the stock is undemanding not only based on an intrinsic valuation via DCF but also compared to its listed peers as the stock is currently trading at only 12x trailing P/E and 9x trailing EV/EBIT, despite its strong fundamentals.

Hence, we reiterate BUY with an unchanged PT of € 86 based on DCF.