Topic: MAX released its Q2 numbers on Friday with sales above and EBITDA below our estimates. Further, the company specified its FY outlook to the lower end of the guidance range.

Q2 Sales came in at € 98m (eNuW: € 92m), a 4.4% increase yoy carried by a strong ELWEMA segment (+39% yoy). EBITDA decreased 28% to € 7.6m (eNuW: € 7.6m) accompanied by a margin decrease of 3.5pp to 7.8%. Profitability was impacted by wage inflation, an increase in personnel and the temporary need for costly external services, especially within the bdtronic segment. Order intake decreased 3.1% yoy affected by continued investment reluctance from customers due to macroeconomic uncertainties, which led to a relatively low order backlog of € 184m compared to the previous years (-11% yoy).

Sales within bdtronic declined by 10% yoy in the second quarter to € 21m impacted by a muted order intake since Q4’23. EBITDA decreased 82% to € 0.9m with a margin of 6.9% (-14.3pp). The increase in personnel cost was a main pressure point, next to a taff comparable base and the top-line decrease. Driven by extraordinarily strong order intake in H1’23 (€ 68m; +77% yoy), bdtronic was working on the edge of its capacity and occupied in addition c. 120 external services on the peak in FY23 to handle the rapidly increased demand. However, despite the recently lower order intake, bdtronic could only slowly and successively reduce their number because of the idiosyncratic know-how of these external services within specific projects.

bdtronic order intake: As the demand for electric vehicles in the US and Europe calmed down due to affordability concerns, lack of adequate infrastructure and uncertain economic conditions, OEMs hesitate to expand their capacity for EVs. Hence, the order intake in the cyclical business declined significantly by 49% yoy to € 12.9m with an order backlog of € 34m (-56% yoy). We expect the situation to remain challenging in the coming quarters and lower our FY24e sales estimates for bdtronic (eNuW: € 85m).       

ELWEMA grew its sales by 39% yoy to € 18m thanks to a steady stream of follow-up orders. EBITDA came in at € 2.1m, an 11% increase yoy (11.9% margin). Thanks to the strong order intake of € 40m (+32%) in H1’24 and long lead times of 12-18 months, the company secured already enough projects for FY25e. -continued-     

MA micro: The divestment of MA micro has received its merger control approval and is expected to be closed in H2’24e. The proceeds will mainly be used to reduce the interest-bearing debt by partially repaying the syndicated loan (eNuW interest rate: 7.5%).

Guidance specified: MAX specified its FY24e outlook to the lower end of the guidance range. The EBITDA target seems plausible to us, however due to the muted order backlog and intake, we expect sales to come in below the guidance range (eNuW: € 378m). Despite the cyclical headwind in the EV sector, mid-term prospects remain intact as well as the competitive quality of the core companies bdtronic and Vecoplan.

Hence, we reiterate our BUY rating with a new PT of € 7.50 (old: € 8.20) based on DCF.