Topic: MAX will release its 2nd quarter on August 2^nd. We expect sales and margins to remain muted.

Investment reluctance among customers started already in the second half of FY23 and should improve only modestly for the second quarter this year. Customers hesitate to place orders due to a challenging macroeconomic environment, restrictive financing conditions and persistently high price levels. After three quarters of declining order intake, we saw in Q1 FY24 for the first time a qoq increase to € 90m (+26% qoq; -21% yoy). However, due to partially long lead times and a low order backlog at the end of FY23 (€ 206m), sales should stay muted in Q2. We expect sales of continued operations to decline slightly by 1.5% yoy to € 92m with an EBITDA margin of 8.2% (- 3.3pp) due to pressure from wage inflation and product mix. 

Bdtronic’s revenue should increase to € 26m (eNuW: +11.5% yoy) due to a solid order backlog of € 52m at the end of FY23 and a strong service business. However, we expect EBITDA to decrease c. 32% yoy to € 3.4m (eNuW: -8.3pp in margin), due to wage inflation, an increase in personnel and an extraordinarily strong comparative period. This is also indicated by a 26% increase in the average number of employees in Q1 to 547 (Q1 FY23: 435) due to an elevated sales level and a high workload per employee in FY23. In addition, there should be some pressure on margins driven by an unfavorably product mix, as the currently fast-growing impregnation business has lower margins compared to dispensing.

We expect Vecoplan’s revenues to decrease by 10% yoy in Q2 to € 37m as we further see investment reluctance in the recycling/waste division. This has already led to a 15.6% yoy decline in order intake in FY23 and a 35% decrease in order backlog (€ 63m end of FY23). EBITDA should come in at € 3.7m with a margin of 10.1% (eNuW).

Nevertheless, mid-term prospects remain bright due to the strong competitive position of its portfolio companies. For instance, Bdtronic is the number one supplier of impregnation machines in the production of electric drives and the third largest supplier for dispensing machines in the automotive market. Driven by its advanced proprietary technology, bdtronic should largely benefit from the ongoing electrification of cars in the mid- and long-term, even if it takes place slower than initially expected.

We reiterate BUY with an unchanged PT of € 8.20, based on DCF.