2023 figures inline with prelims. To recap: FY23 sales decreased by 8.5% yoy to € 200m, largely driven by the highly cyclical Specialty Alumina segment, which reported sales of € 57.8m (-18.5% yoy). On the contrary, Functional Fillers’ sales decreased by only 3.9% to € 142.3m, as revenues from boehmite and gap fillers grew by 6.1% yoy to € 22.4m, whereas boehmite alone showed a 9% yoy sales decline. Positively, the FY EBIT margin stood at 9.2% (-4.2pp yoy), € 18.3m absolute EBIT. Despite the muted operational performance and a 14% increase of working capital, the company generated € 2m of FCF.

Nabaltec also released solid Q1 prelims, which render the FY24 guidance sensible. Q1 sales decreased 5.3% yoy to € 54m, largely due to a tough comparable base (Q1 FY23 with 4% growth vs a 12% decline during the remainder of FY23). Compared to the average of the past three quarters, Q1 sales were up 14%. In fact, the EBIT margin slightly increased by 0.2pp yoy to 9.3% (absolute EBIT of € 5m).

With this, the lower end of the FY24 EBIT margin guidance looks well in reach, if not conservative as it implies a margin of only 6.2% for the remainder of the year. This compares to our 8.2% margin estimate for the rest of FY24e (eNuW: 3.9% yoy sales growth). As a reminder, management expects to grow FY24 sales slightly with an EBIT margin of 7-9%. Growth is expected to be carried by a slight increase of boehmite volumes (+1kt yoy), further growing gap filler demand and improving utilization rates at its US plants, while the remainder of F.F. and S.A. should remain rather flat yoy.

Boehmite retains plenty of potential. During the past two years, the boehmite sales contribution decreased from € 24.2m in FY21 to € 17.3m last year. The main reason behind this was a strong oversupply in China (lacklustre EV demand growth), the core market for EV battery production and a slower than initially expected ramp up of production capacities in Europe and the US. Yet, with demand for ceramic coating solutions expected to 4x until 2028, boehmite should return to growth; eNuW: from € 17m in FY23 to € 25m by FY25e (conservatively below market growth).

In sum, Nabaltec is a cyclical company that has passed the demand trough with a solid balance sheet, several structural growth drivers for core products and upside from boehmite. Valuation seem to lag behind with shares trading on 9/7x EV/EBIT FY24/25e. We confirm our BUY rating with an unchanged € 25 PT based on FCFY 24e  and keep Nabaltec in our NuWays Alpha List.