Acquisition And Investments Will Upgrade Engineered Technology Capabilities

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AnalystConsensusTarget
Consensus Narrative from 5 Analysts
Published
09 Feb 25
Updated
31 Jul 25
AnalystConsensusTarget's Fair Value
€16.76
21.0% undervalued intrinsic discount
31 Jul
€13.24
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1Y
21.5%
7D
1.1%

Author's Valuation

€16.8

21.0% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update01 May 25
Fair value Decreased 1.99%

Key Takeaways

  • Strategic acquisitions and innovations are enhancing revenue and earnings, with operational improvements boosting net margins.
  • Investments and digital transformation efforts lay groundwork for organic growth and cost efficiencies, positively impacting margins.
  • Ongoing market challenges, demand shifts, and global competition pose risks to revenue growth and profit margins, with potential setbacks from the new digital project.

Catalysts

About Semperit Holding
    Develops, produces, and sells rubber products for the medical and industrial sectors worldwide.
What are the underlying business or industry changes driving this perspective?
  • The acquisition of RICO has added a strategic pillar for engineered technology in niche markets, contributing to revenue growth. Operational improvements and product innovations are expected to drive earnings and improve net margins.
  • The expansion of investments at sites like DH5 in Odry and Talheim sets up Semperit for strong organic growth once market conditions improve, likely impacting revenue and operating leverage positively.
  • Cost reduction efforts have led to a significant increase in EBITDA, indicating room for continued improvements in net margins as they manage overheads rigorously.
  • New product developments, such as hybrid handrails and heavy-duty rubber parts for mining, have the potential to expand market share and drive revenue growth, especially in regions with higher demand prospects.
  • Strategic focus on digital transformation through the One ERP project is expected to improve efficiencies, eventually reducing operating costs and positively affecting net margins and earnings.

Semperit Holding Earnings and Revenue Growth

Semperit Holding Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Semperit Holding's revenue will grow by 6.5% annually over the next 3 years.
  • Analysts assume that profit margins will increase from -0.1% today to 5.3% in 3 years time.
  • Analysts expect earnings to reach €42.1 million (and earnings per share of €1.34) by about July 2028, up from €-789.0 thousand today.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.9x on those 2028 earnings, up from -339.0x today. This future PE is lower than the current PE for the GB Machinery industry at 14.7x.
  • Analysts expect the number of shares outstanding to decline by 1.06% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 9.44%, as per the Simply Wall St company report.

Semperit Holding Future Earnings Per Share Growth

Semperit Holding Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • The market challenges continue in the immediate term, particularly in the construction industry and related sectors which could impact future revenue growth.
  • The shift in demand and project delays contribute to concerns about revenue realization and pressure on profit margins in the short term.
  • Despite strategic improvements, the engineered applications division faces price pressure and subdued demand, affecting its EBITDA contribution and overall profit margins.
  • There is potential risk related to the implementation and costs of the new One ERP digital transformation project which may affect earnings as these costs need to be expensed and not capitalized.
  • Increased global competition and uncertainties such as tariffs and geopolitical implications might lead to increased operational costs and influence future profitability and earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of €16.76 for Semperit Holding based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €19.0, and the most bearish reporting a price target of just €13.1.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €790.5 million, earnings will come to €42.1 million, and it would be trading on a PE ratio of 9.9x, assuming you use a discount rate of 9.4%.
  • Given the current share price of €13.0, the analyst price target of €16.76 is 22.4% higher.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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