Topic: Nabaltec published final FY22 figures in line with prelims as well as Q1 prelims. As previsouly highlighted and also reflected in the company's FY23 guidance, the start into the year was rather weak.

FY22 sales grew by 17% yoy to € 219m carried by price effects, unbroken demand for most products and improved utilization rates at its US sites. All that offset a weaker boehmite business (eNuW: 5kt sold vs 7kt in 2021). Despite less high-margin boehmite sales (eNuW: ~30% EBIT margin), the group's EBIT margin came in at 13.3%. Notably, input costs (50% of electricity and alumina) were still hedged/previously secured. What's new, Nabaltec generated FCF of almost € 22m despite elevated inventory levels (+35% yoy to € 46m). Hence, net debt decreased to € 3m, while having € 88m cash on hand.

Muted start into the year. Preliminary Q1 sales grew by 4% yoy to € 57m (eNuW: € 55m) as price increases should have been able to to compensate for lower volumes. The key reasons behind the dropped volumes are likely filled customer inventories, a trend towards cash management and some end market weaknesses (i.e. in construction). We hence expect boehmite volumes to be largely in line with previous year's levels. Functional Fillers grew by 8.7% yoy to € 40m and Speciality Alumina  declined by 5% yoy to € 17m. Preliminary Q1 EBIT decreased by 27% yoy to € 5.2m (eNuW: € 5.3m), a 9.1% margin (-3.9pp yoy) as the company had to face several cost increases since the beginning of the year, including salary increases, the expiry of price hedges for 50% of the used electricity and alumina, the key raw material. Operational headwinds are also reflected in the FY23 guidance. Management expects 3-5% yoy sales growth (eNuW: 1.7%) and only a 8-10% EBIT margin (eNuW: 9.9%).

Boehmite remains the mid-term earnings driver. During the next 7-8 years, demand for lithium-ion batteries is seen to skyrocket, driven by the EV trend. Europe alone, is seen to account for 1,300 GWh by 2023. Recent regulatory initiatives should support localized productions across the value chain. In fact, CATL is moving forward with its 24GWh plant in Germany and a 100GWh plant in Hungary (kick-off expected for H2´23). This bodes well with Nabaltec's current boehmite capacity expansion (from 12kt to 24kt by the end of 2024e). A fully utilized German production, which is sufficient for roughly 240GWh of battery cells, would yield € 72m sales and € 22m EBIT.

We reiterate BUY with an unchanged € 36 PT, based on FCFY 2024e.