Topic: While Q2 sales was burdened by the challenging macro environment, Nynomic managed to improve its profitability. Following a transitional FY24, the company should return to growth in FY25. 

While Q2 sales grew 7.4% qoq to € 24.7m, the yoy comparison reveals a notable decline of 21% (H1 sales are down 9.7% yoy) due to a high comparable base (Q2 ’23 grew 20% yoy due to catch up effect from order postponements). In addition, revenue growth was burdened by a general order reluctance across the group’s segments as visible in the weak order momentum during last year’s H2, which was down roughly 47% at € 38m, burdened growth. Importantly, the tide has begun turning with order intake in Q1 up 25% and Q2 up 15% yoy. The order backlog at the end of H1 stands at almost € 60m.

Favourable margin development. Despite the weak sales development, the EBIT margin in Q2 improved by 60bps yoy to 10.5% (H1 ’24 +10bps), which should predominantly be an improving product mix and an increased focus on higher margin projects.

Improving momentum in H2. Similar to last year, 2024 is also seen to be back-end loaded (eNuW: H2 with 60% of FY24 sales). This is also reflected by the confirmed FY24 guidance of single-digit yoy sales growth and a margin improvement. Yet, we now see growth rather at the lower end (eNuW: 2%), implying 11.5% yoy growth for the second half of the year (driven by a significant demand increase within Clean Tech) with an EBIT margin of 16.1% (-50bps yoy).

Accelerating growth from FY25 onwards. During the mid-term, we expect Nynomic to return to double-digit organic growth rates supported by recent product launches, re-vitalized demand from several end markets (e.g. medical and pharmaceutical applications) and several other products gaining traction (e.g. TactiScan). With this, EBIT margins are also seen to strongly improve (FY26e: 15.7%).

Valuation remains attractive following the recent share price weakness. Taking into account our reduced estimates, Nynomic trades on 9/6.5x EV/EBIT (FY24/25e), which we regard as unjustified in light of the underlying growth prospects during the next few years.

We reiterate our BUY rating but trim our price target to € 50 (old: € 52), based on DCF.