Q2 sales grew 11% yoy to € 54.4m (eNuW: € 55m) thanks to 18% volume growth. Functional Fillers (+16% yoy) compensated for the still lagging Specialty Alumina segment (-1% yoy). Besides a pick up of demand for boehmite (+20% yoy), its environmental flame retardants (~63% of group sales) were the key driver, benefiting from rising investments into data centres and renewable energy sources and an improving US construction industry. H1 group sales +2.2% yoy to € 108m.

Q2 EBIT jumped 79% yoy to € 5.9m, a 10.8% margin (+4.2pp yoy) thanks to improved capacity utilizations but also lower energy costs. H1 EBIT +28% yoy to € 10.9m (9.9% margin).

The strong operational performance coupled with working capital normalizations lead to an operating cash flow of € 24m in H1, FCF of € 10m was due to planned investments into boehmite and gap filler capacities. The balance sheet remains strong with € 93m of cash and a net cash position of € 2.5m.

FY24 guidance raised. Thanks to continued op. improvements in Q2 and sufficient visibility throughout H2, management raised its FY24 targets, now expecting 2-4% yoy sales growth (old: slight growth; eNuW old: +3.9%) and an EBIT margin of 8-10% (old: 7-9%; eNuW old: 8.6%). The lower end of the margin guidance looks conservative (eNuW), as it implies a margin of only 5.7% for H2 (eNuW 8.1%).

We confirm our BUY rating with an unchanged € 25 PT based on FCFY 2025e; Nabaltec remains on our Alpha List. Why to own the stock:

• Improving end markets. As highlighted during the earnings call, the positive momentum across its key end markets is seen to continue throughout H1, especially within the US.
• Regulatory tailwinds should fuel the core business with environmental friendly flame retardants (ATH). Demand for those is driven by tightening regulation, wherever cables and hard plastics are used (e.g. buildings, cars, trains, etc.) to maximize escape times during a fire.
• Upside from boehmite. Despite the current weakness, boehmite still has the potential to notably contribute to EPS growth going forward. At the current valuation, this seems to be completely priced out.
• Attractive valuation. Nabaltec trades on a 5% discount to its book value (vs. historical avg. of 2x P/BV), while offering a healthy balance sheet and ongoing op. improvements.