Topic: R. Stahl will release its Q3 report on November 6^th. We expect moderate sales growth and a slight decrease in EBIT from a high comparable base.

Sales are expected to come in at € 90m, 4.7% above last year (eNuW), supported by a lower but still solid order backlog of € 121m end of H1’24.

EBIT is seen to come in at € 7.5m (-12% yoy), leading to a sound 8.3% EBIT margin (-1.5ppts yoy). While extraordinary costs from the EXcelerate strategy program should be lower in Q3 and Q4, as already 80% of the costs have occurred, an increase in personnel costs could put pressure on profitability. We expect an increase from € 33.6m in Q3’23 up to € 36.0m (40% of sales vs. 37.6% in Q3’23), of which c. 70% should be attributable to wage inflation and 30% to a higher headcount (1,754 end of H1’24 vs. 1,715 end of H1’23).

Solid order intake expected: After the subdued order intake in H2’23, driven by active destocking activities from customers due to an increasing stabilization of global supply chains and a muted European chemical industry, order intake in H1’24 recovered from a low level (€ 181m in H1’24 vs. € 157m in H2’23). As demand in the chemical industry is slightly picking up and thanks to structural trends such as LNG and nuclear, we expect order intake to remain on a solid level (eNuW: € 88m).

FY sales and adj. EBITDA guidance in reach: Management forecasts sales in the range of € 335-350m (eNuW: € 349m) and an adj. EBITDA of € 35-45m (eNuW: € 40m). The forecast looks reasonable to us and might be even a bit conservative on the top-line carried by an unbroken demand for electrical explosion protection solutions in the LNG and gas industry and a solid order backlog.

R. Stahl’s mid-term prospects remain bright as the company strongly benefits from (1) its superior market share along the LNG value chain, (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. 

We reiterate our BUY rating with an unchanged PT of € 29.00, based on DCF.