Topic: Poland's decision to massively build out its nuclear power production landscape during the next 15 years should yield additional strong growth opportunities for R. Stahl following the successful market entry in the UK.

During the next 15 years, Poland plans to build 79 "Small Modular Reactors" (SMR) with an average capacity of 300 MW in order to significantly increase the supply of emission-free energy for foreign investors and local industries during the mid-term. In fact, the 

International Atomic Energy Agency (IAEA) has just given Poland the green light for this initiative with construction of the first SMR likely to begin in 2026.

Why this is good news for R. Stahl:  As of 2023, R. Stahl has begun to supply LED lightning solutions to a nuclear project in the UK (Hinkley Point C) with a similar projects to follow each year until 2030 (project volumes of € 10-12m each). More importantly, the  UK project is partially owned by the French utility company EDF (through a JV), which also manages France’s 56 power reactors, which are old and carry a significant maintenance backlog. Being the supplier of choice for Europe's largest operator for nuclear power plants, we see a high likelihood that R. Stahl should be able to at least partially participate in Poland's nuclear programme during the mid- to long-term.

Alongside nuclear power, R. Stahl should also strongly benefit from (1) its superior market shares along the LNG value chain (liquefaction and shipping: 75%, natural gas production: 50% and regasification 25%) and (2) a rising need for production automation across offshore oil and gas rigs, chemical/pharmaceutical/food production plants. During the short- to mid-term, the company should hence enjoy dynamic mid to high single-digit annual sales growth.

In sum, we regard R. Stahl as well positioned to benefit from several structural growth trends alongside nuclear power during the foreseeable future, which should ultimately lead to gradually improving margins, returns and cash flow generation. Yet, this is not yet fully reflected in the company's valuation as shares are trading on 8.9x PE 2024e.

We hence reiterate our BUY rating with an unchanged € 31 PT, based on FCFY 2024e.