MAX Automation increased its bottom-line guidance for the FY23e, now expecting to reach EBITDA of € 38-44m, which is an almost 10% hike over the previous outlook of € 35-41m, and at the mid-point exceeds our old expectations by nearly 10%. At the same time, MAX confirmed its FY sales outlook of € 410-470m (+7.5% yoy at the midpoint / eNuW: € 451m).

This means that management now expects to record stronger EBITDA profitability of around 9.2% to 9.4% versus 8.5% to 8.7% before. The upgrade comes on the back of raw material price deflation and efficiency gains, courtesy of improved project management. 

The latter became visible already in Q1‘23, when subsidiary MA micro expanded its EBITDA margin by a whopping 12pp yoy to 26% - despite a 25% yoy sales decline - carried by measures to optimize project management. 

Strong H1‘23 results should have also contributed to management’s decision to increase guidance. According to prelim H1’23 figures, sales rose by 15% yoy to € 217m and EBITDA by 66% yoy to € 27.4m, with the EBITDA margin expanding by almost 400bps yoy to 12.6%. We expect subsidiaries bdtronic (18% of group sales) and Vecoplan (42% of group sales) to be the top performers: the former is seeing strong demand for its dispensing technology targeting, amongst other, automotive semi applications, the latter benefits from a high equipment backlog geared towards the recycling / waste end-market.

Evidently, even the new FY‘23e guidance looks conservative, given that MAX achieved a 12.6% EBITDA margin in H1’23, which is significantly above the FY guidance of 9.2% to 9.4%. This would imply a much weaker margin in H2‘23E, which seems unlikely, considering the high backlog and health order intake performance (1.1x book to bill in Q1‘23).

Reiterate BUY with a new PT of € 7.40, based on DCF and supported by FCFY’23e (€ 7.10): we increase 2023e est. for the new guidance but leave 2024e and beyond unchanged due to macro uncertainties. The overhauled DCF model (7.0% TY EBIT margin / 2.0% TY growth) features a lower WACC of 8.5% to reflect the successful restructuring of Elwema and liquidation of iNDAT as well as the de-risked balance sheet following the capital raise.