Topic: R. Stahl released strong Q2 numbers with sales and EBITDA above our estimates. Management confirmed its FY24e guidance, which looks well in reach (eNuW).

Q2 sales grew 16.4% yoy to € 89.3m (eNuW: € 87m), driven by a solid order backlog of € 122m at the end of Q1 and a further ease in supply chains. Q2 adj. EBITDA increased disproportionately by 25.7% yoy to € 10.9m (eNuW: € 10.2m) thanks to a lower cost of materials ratio (30.6% vs. 34.4% in Q2’23) and despite higher personnel costs due to wage inflation. Further, other operating expenses came in unusually high (€ 16.4m vs. € 13.9m in Q2’23) due to negative one-offs from consulting costs incurred in connection with the EXcelerate strategy program, which should come down in Q3 and Q4. The adj. EBITDA margin increased by 0.9pp yoy to 12.2% and remains at a solid level.   

Solid order intake. After a 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). Q2 order intake came in at € 88.5m, slightly below the € 89.3m last year but significantly above Q3&Q4’23. Order intake was supported by a slight recovery in the chemical industry and new orders in the nuclear sector (c. € 3m as stated in the CC). Book-to-bill came in at a healthy 0.99 leading to a solid order backlog of € 121m.

Guidance confirmed: Management confirmed its FY24e guidance with sales between € 335 – 350m and adj. EBITDA in the range of € 35 – 45m. Supported by a strong H1 and a solid order backlog, it seems plausible for R. Stahl to reach its guidance in our view (eNuW: sales € 349; adj. EBITDA € 40m). 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.       

Hence, R. Stahl is well positioned to gradually improve margins, returns and cash flow generation. We reiterate our BUY rating with an unchanged € 29 PT, based on DCF.