Topic: R. Stahl released solid FY23 preliminary figures, exceeding the company’s guidance on the top-line. However, Q4

profitability and order intake were slightly weaker than expected due to a soft chemical industry in the DACH-region.

Preliminary Q4 sales came in at € 89.9m (eNuW: € 77.3m), a 25.2% yoy increase stemming from a strong order backlog and further improved supply chains as well as logistics situations. Preliminary FY23 sales were up 20.5% yoy at € 331m, exceeding the guidance range of € 305-320m and our expectations (eNuW: € 318m). Adj. EBITDA in Q4 stood at € 6.1m (eNuW: € 7.1m), up from € 5.7m yoy and with a slightly lower margin of 6.8% (- 1.1pp) due to a weak chemical business and wage inflation.

Strong order intake and backlog for FY23. R. Stahl’s order intake for FY23 increased 9.3% yoy, despite a weak Q4. With c. 20% of sales coming from the chemical industry, R. Stahl’s final quarter of FY23 was affected by a temporarily weak chemical sector. Despite a strong order intake for the first weeks of FY24, we expect the softening to carry well into FY24e. Nevertheless, FY24e sales should be supported by the strong € 115m in order backlog (+5.2% yoy) and structural growth drivers kicking in. 

LNG delivers a material mid-term growth opportunity. Independence from Russian energy imports leads to a rising demand for LNG in Europe and R. Stahl offers a wide range of explosion-proof equipment for this approach. In 2023, the EU imported over 120 billion cubic meters (bcm) in LNG and grew its capacity by 40 bcm. As a leading provider of explosion protection solutions for LNG tankers, terminals and liquefaction/regassification plants, R. Stahl should clearly benefit from this trend.

Potential impairment of investments in associated companies burdens the financial result. In 2016, R. Stahl acquired a 25% stake in ZAVOD Goreltex, the second largest company for explosion protection in Russia (company news 16.09.2016). In our view, a full write-off for the € 10.3m carrying amount in FY23 is likely, as R. Stahl cannot participate in the earnings of ZAVOD Goreltex and lost its influence in the company.

Apart from the investment in ZAVOD Goreltex, R. Stahl’s operating turnaround is intact. We reiterate our BUY rating with an unchanged PT of € 31, based on DCF.