Report update on Schaffner Holding AG by Research Dynamics: HY/2014 results (News mit Zusatzmaterial)
DGAP-News: Research Dynamics / Schlagwort(e): Research Update
Report update on Schaffner Holding AG by Research Dynamics: HY/2014
results (News mit Zusatzmaterial)
14.05.2014 / 07:00
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Comprehensive guidance beat
Schaffner has comprehensively beaten its own guidance for 1H2014 (guidance
given on 21 February 2014). The group reported sales of CHF 102.6 million
as against the guidance of CHF 100 million. Operating margin came in at
4.8%, indicating a 308 bps expansion over 1H2013, and in-line with
guidance. It is worth noting that the group's P&L includes only minimal
contributions from the Trenco acquisition completed on 31 March 2014,
however, acquisition-related costs of CHF 0.6 million have already been
absorbed during 1H2014. This strategically important acquisition has
catapulted the PM division to the third position in global ranking with
annualized revenues of about CHF 73 million and will contribute about CHF
6-7.5 million to FY 2014 revenues (Trenco's 2013 sales amounted to CHF 12
million).
Solid execution leads to improved operating performance
Schaffner Group reported a robust set of numbers for 1H2014. The company
recorded a 14.5% increase (15.9% in local currencies) in sales to reach CHF
102.6 million. This growth was driven by a 27.6% and 18.6% growth in Power
Magnetics (PM) and Automotive divisions, which grew to CHF 30.8 million and
CHF 18.1 million respectively. The revenue growth was also supported by 7%
growth in the largest EMC division (52% of revenue). The overall robust
performance can be attributed to cyclical recovery in Europe. This semester
was also a testimony to the company's solid execution of its margin
expansion strategy. The company reported a 308 bps y/y improvement in its
EBIT margin to 4.8% in 1H2014. All the segments witnessed an expansion in
operating margin: EMC's margin expanded 470 bps to 13.5%, PM's margin grew
216 bps to 5.6%, while Automotive turned positive in this semester.
The group's profitability benefitted from the improved utilization coupled
with operation excellence. Profitability at the Automotive division
improved as a few major projects entered series production, which had
caused high development costs last year. The positive operating performance
trickled down to the next level as the group reported a net profit of CHF
3.2 million, as against CHF 0.2 million in 1H 2013. This supports our
conviction that the management's efforts to deliver profitable growth have
begun to bear fruit. Our optimism is further enhanced by the ongoing
improvement in the economic fundamentals of the US and Europe.
No changes to our forecasts
The group has updated its guidance for FY2014 and now expects its revenue
growth to be between 10-15% (as against 10% y/y earlier), and also sees an
improvement in its EBIT margin (FY2013: 4.8%). As far as our estimates are
concerned, we are retaining our forecasts at the same level (updated
post-Trenco acquisition) and expect a full year sales growth of 13.8% at
the top end of the guided range. We are increasingly confident about the
company's ability to post robust results given the company's proven
strategy execution. Our EBIT margin estimate for the full year is 7.4% (up
255bps y/y), as we expect the ongoing operational excellence to further
boost Schaffner's profitability in 2HFY2014.
Trading at a significant discount to its peers
Schaffner currently trades at an attractive discount of 12%, 7% and 14% on
EV/EBITDA, EV/EBIT and P/E basis to its product peers, respectively.
Similarly, the stock trades at a discount of 26%, 24% and 29% on EV/EBITDA,
EV/EBIT and P/E basis to its industry peers, respectively. Given the
expected robust growth in sales and expanding operating margins, we believe
a discount to its peers is unwarranted.
Ende der Corporate News
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Zusatzmaterial zur Meldung:
Dokument: http://n.equitystory.com/c/fncls.ssp?u=WMWVUUTYTW
Dokumenttitel: Schaffner_Update_Research Dynamics_14 May 2014
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