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.