Topic: R. Stahl reported a solid final Q1 underpinning the strong demand for electrical explosion protection solutions, which should continue due to favorable structural trends. Management confirmed FY24e guidance, which looks well in reach (eNuW).

To recap, Q1 sales grew 8.5% yoy to € 84.7m, driven by a strong order backlog of € 115m at the end of FY23. Further, while global supply chains remained partially disrupted in the previous year, there were no significant restrictions in Q1 FY24. Q1 adj. EBITDA decreased 19% to € 8.4m with a lower but still solid margin of 9.9% (-3.4 pp) due to inflationary effects from personnel costs, a higher material expense ratio and a € 2m one-off from the implementation of the EXcelerate strategy program; 12.3% adj. EBITDA margin excluding one-offs.

After a subdued order intake of € 74.5m in the fourth quarter, order intake came in surprisingly positive at € 92.3m, only slightly below the exceptionally strong order intake of last year’s Q1 (€ 96.7m). Driven by an increasing stabilization of global supply chains, the order intake in Q4 2023 was negatively affected by active destocking activities from customers in addition to a soft chemical industry in the DACH region. While demand in the chemical industry remained muted, the LNG, and petrochemical industry as well as the nuclear sector showed positive momentum during Q1. Due to the strong order intake, order backlog increased 6% to a solid level of € 122m (end of FY23: € 115m).  

Management confirmed its FY24e guidance with sales in the range of € 335 – 350m and adj. EBITDA between € 35 – 45m. Thanks to the good start into the year and a solid order backlog, the guidance seems to be well in reach (eNuW sales: € 347m; adj. EBITDA: € 39.7m). Even more importantly, R. Stahl’s mid-term prospects remain bright as the company strongly benefits from (1) its superior market share along the LNG value chain (liquefaction and shipping: 75%, natural gas production: 50% and regasification 25%), (2) a rising need for production automation across offshore oil and gas rigs, and production plants of several industries and (3) the ongoing nuclear renaissance across Europe.

With that, R. Stahl is well positioned to gradually improve margins, returns and cash flow generation. As shares are trading on only 5.9x EV/EBITDA 2024e we confirm our BUY rating with an unchanged € 29 PT, based on DCF.