Deceuninck's Next Move: 5.95 Euro per share

I'll calculate Deceuninck's intrinsic value using three valuation methods: DCF, Liquidation Value, and Motivated Private Buyer.

Financial Data Extraction (€ millions)

Historical Performance

2022 2023 2024 Revenue 974.1 866.1 827.0 EBITDA 102.3 117.9 118.1 EBIT 47.2 51.9 62.9 Net Profit 7.6 13.6 15.9 Free Cash Flow 71.7 71.8 34.0*

*Estimated: Operating CF (72.1) - CapEx (38.5)

Balance Sheet (2024)

Total Assets 722.2 Cash 34.1 Net Debt 85.1 Working Capital 104.4 PPE (net) 304.7 Equity 355.6 Shares Outstanding 138.5M

1. DCF VALUATION

Revenue Projections

Given construction market challenges but recovery expected:

2025E 2026E 2027E 2028E 2029E Terminal Revenue 840 880 920 950 975 990 Growth % 1.6% 4.8% 4.5% 3.3% 2.6% 1.5%

EBITDA Margins & Projections

EBITDA Margin 14.0% 14.5% 15.0% 15.2% 15.5% 15.5% EBITDA 117.6 127.6 138.0 144.4 151.1 153.5

Free Cash Flow Projections

2025E 2026E 2027E 2028E 2029E EBITDA 117.6 127.6 138.0 144.4 151.1 - Depreciation (48) (50) (52) (54) (56) EBIT 69.6 77.6 86.0 90.4 95.1 - Tax (25%) (17.4) (19.4) (21.5) (22.6) (23.8) NOPAT 52.2 58.2 64.5 67.8 71.3 + Depreciation 48.0 50.0 52.0 54.0 56.0 - CapEx (45) (48) (50) (52) (54) - ΔWorking Cap (5) (8) (10) (8) (6) FCF 50.2 52.2 56.5 61.8 67.3

DCF Calculation

WACC = 8.5% (Risk-free 3% + Beta 1.1 × Market Premium 5% = 8.5%) Terminal Growth = 1.5% Present Value of FCFs (2025-2029): €207.8M Terminal Value = 67.3 × (1.015) / (0.085 - 0.015) = €977.4M PV of Terminal Value = €650.8M Enterprise Value = €858.6M Less: Net Debt = (85.1)M Equity Value = €773.5M Price per Share = €773.5M ÷ 138.5M = €5.59

2. LIQUIDATION VALUE

Asset Liquidation Estimates

Book Value Recovery % Liquidation Value Cash 34.1 100% 34.1 PPE 304.7 45% 137.1 Inventory 116.7 70% 81.7 Receivables 111.2 85% 94.5 Other Assets 155.5 30% 46.7 Total Assets 393.1 Less: Liabilities Debt 119.3 100% (119.3) Payables 123.5 100% (123.5) Other Liabs 89.7 100% (89.7) Liquidation Costs (est.) (25.0) Net Liquidation Value €35.6M Per Share €0.26

3. MOTIVATED PRIVATE BUYER

Strategic Premium Analysis

A motivated strategic buyer would value:

Base Valuation (Trading Multiples)

EV/EBITDA Multiple: 7.5x (industry average) Base EV = 118.1 × 7.5 = €886M Less Net Debt = (85.1)M Base Equity Value = €800.9M

Strategic Premiums:

1. Recycling Leadership: +20% (unique European position)
2. Market Consolidation: +15% (scale benefits)
3. Sustainability Leadership: +10% (ESG premium)
4. Geographic Diversification: +10% (risk reduction)
5. Control Premium: +25% (typical control premium)

Premium Calculation:

Base Value: €800.9M Strategic Value: €800.9M × 1.20 × 1.15 × 1.10 × 1.10 = €1,335M Control Premium: €1,335M × 1.25 = €1,669M Per Share = €1,669M ÷ 138.5M = €12.05

VALUATION SUMMARY

Method Equity Value (€M) Price per Share Current Premium/Discount DCF 773.5 €5.59 +130% Liquidation 35.6 €0.26 -89% Strategic Buyer 1,669 €12.05 +396% Current Price 336.7 €2.43 -

KEY INSIGHTS

DCF Analysis

• Fair Value: €5.59 suggests stock is undervalued by 130%
• Sensitive to: WACC assumptions, terminal growth rate, margin recovery
• Bull Case: €7.50+ if margins reach 16%+ and growth accelerates
• Bear Case: €3.50-4.00 if construction downturn persists

Investment Thesis

Strong Buy based on:

1. Sustainability Moat: Leading recycling position
2. Margin Recovery: Operational improvements driving efficiency
3. Market Recovery: Construction markets cyclical, recovery expected
4. ESG Premium: Increasing investor focus on circular economy
5. Strategic Value: Attractive consolidation target

Risk Factors

• Construction market timing uncertainty
• Raw material cost volatility
• Execution risk on German restructuring
• Currency exposure (TRY, USD)

Recommendation: BUY with €6.00 target price (12-18 months)

The DCF suggests significant undervaluation, while the strategic buyer analysis shows the substantial value that could be unlocked through consolidation or full sustainability premium recognition.

Company specializes in PVC doors and windows with an major subsidiary in Turkey.

# Ege Profil Financial Analysis (2018-2024)

## Turkish Subsidiary of Deceuninck

### Executive Summary

Ege Profil, Deceuninck's Turkish subsidiary, has shown extraordinary growth from 2018 to 2024, with significant expansion particularly after 2021. The company appears to have been either acquired or significantly restructured around 2021, as evidenced by the dramatic scale change in operations.

---

## 📈 Key Growth Metrics (2018-2024)

### Compound Annual Growth Rates (CAGR)

- Revenue CAGR: 45.82%

- EBITDA CAGR: 45.32%

- Equity CAGR: 56.23%

### Revenue Performance

|Year|Revenue (Million TRY)|YoY Growth|Key Observations|

|---|---|---|---|

|2018|1,106|-|Base year|

|2019|986|-10.81%|Decline, possibly due to Turkish economic conditions|

|2020|1,323|+34.17%|Recovery despite COVID-19|

|2021|2,626|+98.48%|**Major turning point** - likely acquisition/restructuring|

|2022|9,435|+259.22%|**Explosive growth** - full integration effects|

|2023|9,321|-1.20%|Stabilization|

|2024|10,633|+14.08%|Continued growth|

### EBITDA Performance

|Year|EBITDA (Million TRY)|EBITDA Margin|YoY Growth|

|---|---|---|---|

|2018|252|22.74%|-|

|2019|168|17.07%|-33.06%|

|2020|304|22.98%|+80.63%|

|2021|393|14.98%|+29.38%|

|2022|1,389|14.72%|+252.97%|

|2023|2,375|25.48%|+71.01%|

|2024|2,369|22.28%|-0.26%|

### Shareholder Equity Evolution

|Year|Equity (Million TRY)|YoY Growth|

|---|---|---|

|2018|431|-|

|2019|426|-1.24%|

|2020|689|+61.93%|

|2021|1,115|+61.82%|

|2022|2,060|+84.71%|

|2023|4,540|+120.39%|

|2024|6,265|+38.01%|

---

## Debt Analysis

### Debt Levels and Leverage

|Year|Total Debt (Million TRY)|Debt-to-Equity Ratio|Assessment|

|---|---|---|---|

|2018|349|0.811|High leverage|

|2019|323|0.758|High leverage|

|2020|270|0.393|Improving|

|2021|319|0.286|Significant improvement|

|2022|222|0.108|Very low leverage|

|2023|403|0.089|Excellent|

|2024|534|0.085|**Excellent - lowest ratio**|

### Key Debt Observations:

- Dramatic deleveraging from 2018-2024

- Debt-to-equity ratio improved from 0.811 to 0.085

- Despite absolute debt increase in 2024, leverage remains minimal due to strong equity growth

- Financial health: Excellent, with conservative capital structure

---

## 🔍 Critical Insights

### 1. 2021 Transformation

- Revenue nearly doubled from 2020 to 2021

- Continued explosive growth in 2022 (+259%)

- Likely represents Deceuninck's major investment or full acquisition

### 2. Operational Efficiency

- EBITDA margins recovered to >22% by 2024

- Strong profitability despite Turkish inflation environment

- Demonstrates effective cost management

### 3. Capital Structure Strength

- Equity increased 14.5x from 2018 to 2024

- Minimal financial leverage (D/E: 0.085)

- Strong balance sheet to weather economic volatility

### 4. Recent Performance Warning (Q1 2025)

- Q1 2025 revenue: -35.31% vs Q1 2024

- Q1 2025 EBITDA: -59.82% vs Q1 2024

- Significant deterioration requiring attention

---

## Currency Impact Analysis (EUR Terms)

### EUR/TRY Exchange Rate Evolution

|Year|EUR/TRY Rate|YoY Depreciation|Impact|

|---|---|---|---|

|2018|5.67|-|Base year|

|2019|6.35|+12.0%|Moderate depreciation|

|2020|8.45|+33.1%|COVID-19 impact|

|2021|10.41|+23.2%|Accelerating inflation|

|2022|17.42|+67.3%|**Severe depreciation**|

|2023|25.77|+47.9%|Continued weakness|

|2024|35.58|+38.1%|Persistent pressure|

Cumulative TRY Depreciation vs EUR (2018-2024): 527.5%

### Performance in EUR Terms (Millions)

|Year|Revenue TRY|Revenue EUR|EBITDA EUR|Equity EUR|

|---|---|---|---|---|

|2018|1,106M|€195.0M|€44.4M|€76.0M|

|2019|986M|€155.3M|€26.5M|€67.0M|

|2020|1,323M|€156.6M|€36.0M|€81.6M|

|2021|2,626M|€252.3M|€37.8M|€107.1M|

|2022|9,435M|€541.6M|€79.7M|€118.2M|

|2023|9,321M|€361.7M|€92.2M|€176.2M|

|2024|10,633M|€298.9M|€66.6M|€176.1M|

### Real Growth Rates (EUR CAGR 2018-2024)

- Revenue: 7.4% (vs 45.8% in TRY)

- EBITDA: 7.0% (vs 45.3% in TRY)

- Equity: 15.0% (vs 56.2% in TRY)

### Key Currency Insights:

1. Massive Currency Headwind: 84% of TRY growth eroded by depreciation

2. Real Growth Still Positive: 7-15% EUR CAGR demonstrates genuine business expansion

3. Peak EUR Revenue in 2022: €541.6M, declining since due to FX

4. Equity Value Protected: 15% EUR CAGR shows successful value preservation

---

## Risk Factors & Considerations

### Macroeconomic Challenges:

1. Turkish Lira Depreciation: 527% depreciation dramatically impacts EUR consolidation

2. Hyperinflation Accounting: Financial statements restated for inflation

3. Q1 2025 Decline: Sharp revenue (-35%) and EBITDA (-60%) drop vs Q1 2024

4. Currency Volatility: Future TRY weakness could further erode EUR returns

### Positive Factors:

1. Real Growth Achievement: 7.4% EUR revenue CAGR despite massive FX headwinds

2. Market Position: Strong local market share and pricing power

3. Financial Flexibility: Minimal leverage (D/E: 0.085) provides resilience

4. Scale Achievement: Operations expanded despite currency challenges

---

## Valuation Considerations for Deceuninck

### Impact on Parent Company (EUR Terms):

- 2024 Revenue Contribution: ~€299M (subject to consolidation method)

- 2024 EBITDA Contribution: ~€67M

- Peak Performance: 2022 with €542M revenue, €80M EBITDA

- Current Trend: Declining EUR contribution despite TRY growth

### Strengths:

- Real Growth Engine: 7.4% EUR revenue CAGR demonstrates genuine expansion

- Profitability: Maintained 22-25% EBITDA margins despite FX pressures

- Balance Sheet: Minimal leverage (0.085 D/E) reduces financial risk

- Market Position: Strong local presence with pricing power

### Concerns:

- Currency Risk: 527% TRY depreciation over 6 years

- EUR Performance: Revenue down from €542M (2022) to €299M (2024)

- Q1 2025 Warning: -35% revenue, -60% EBITDA vs prior year

- Translation Impact: Continued TRY weakness will pressure consolidated results

### Recommended Analysis:

1. Assess hedging strategies and their effectiveness

2. Evaluate local market share gains vs currency losses

3. Analyze Q1 2025 decline causes (market conditions vs competition)

4. Consider strategic options (maintain, divest, or hedge more aggressively)

5. Review transfer pricing and dividend repatriation policies

---

## Conclusion

Ege Profil presents a complex valuation challenge for Deceuninck. While the Turkish subsidiary achieved remarkable nominal growth (45.8% revenue CAGR in TRY), currency depreciation reduced this to a more modest 7.4% CAGR in EUR terms. The operation remains profitable with healthy margins and minimal debt, but the EUR contribution has declined from its 2022 peak of €542M to €299M in 2024.

The sharp Q1 2025 performance decline (-35% revenue, -60% EBITDA) raises immediate concerns about business momentum. For Deceuninck's valuation, Ege Profil represents both an opportunity (emerging market growth, strong local position) and a risk (currency volatility, macro instability). The subsidiary's true value depends on management's ability to navigate Turkey's challenging economic environment while protecting shareholder value through operational excellence and potentially enhanced hedging strategies.

# Ege Profil Valuation Analysis

## Deceuninck Turkish Subsidiary - Three Valuation Scenarios

### Executive Summary

Three distinct valuation methodologies yield values for Ege Profil reflecting both its strong fundamentals (minimal debt, profitable operations) and significant risks (Turkish macro environment, Q1 2025 performance decline).

| Valuation Method | Equity Value (€M) | Key Assumptions |

| ------------------------- | ----------------------- | ------------------------------------ |

| Strategic Buyer | €175-374M (Base: €203M) | 2.75x EBITDA after 50% risk discount |

| Liquidation (Forced) | €43-62M (Base: €60M) | 36% of book value |

| Liquidation (Orderly) | €91-110M (Base: €108M) | 65% of book value |

| DCF (Recovery Case) | €216M | 18% WACC, 2% terminal growth |

Key Insight: Company has only €2.1M financial debt and €12.3M net cash position, providing significant downside protection.

Recommended Valuation Range: €180-220M (Strategic buyer base case to DCF)

---

## 1. Strategic Private Buyer Valuation

### Methodology

Applied industry EV/EBITDA multiples with significant risk adjustments for Turkish exposure.

### Key Inputs

- Normalized EBITDA: €79.4M (average of 2023-2024)

- Base Multiple: 5.5x (typical emerging market building materials)

- Risk Discounts Applied:

- Country risk: -25%

- FX volatility: -15%

- Q1 2025 performance: -10%

- Total discount: -50%

- Adjusted Multiple: 2.75x

### Valuation Calculation

```

Enterprise Value = €79.4M × 2.75 = €218.4M

Less: Net Debt = €15.0M

Equity Value = €203.3M

```

### Sensitivity Range

|Scenario|Multiple|Equity Value|

|---|---|---|

|Pessimistic|2.4x|€175M|

|Base Case|2.75x|**€203M**|

|Optimistic|4.9x|€374M|

### Strategic Buyer Rationale

- Access to high-growth Turkish market

- Established manufacturing and distribution

- Potential synergies with European operations

- Currency natural hedge for Turkish sales

---

## 2. Liquidation Valuation

### Key Finding: Company Has Minimal Debt!

- Financial Debt: Only €2.1M (excluding leases)

- Total Debt with Leases: €4.8M

- Cash Position: €14.4M

- Net Cash: €12.3M (company is debt-free!)

### A. Forced Liquidation (Distressed Sale)

#### Asset Recovery Analysis (Q1 2025)

|Asset Type|Book Value (€M)|Recovery %|Liquidation Value (€M)|

|---|---|---|---|

|Cash|14.4|100%|14.4|

|Receivables|88.2|65%|57.3|

|Inventory|26.2|35%|9.2|

|PP&E|148.4|30%|44.5|

|Intangibles|3.7|5%|0.2|

|Other Assets|17.0|20%|3.8|

|**Total Assets**|**297.8**|**43%**|**129.4**|

#### Realistic Liability Settlement

|Liability Type|Book (€M)|Treatment|Pay in Liquidation|

|---|---|---|---|

|Financial Debt|2.1|Must Pay|100%|

|Trade Payables|60.7|Must Pay|100%|

|Employee Claims|1.7|Must Pay|100%|

|Taxes (current)|0.7|Must Pay|100%|

|**Deferred Income**|37.5|No service = No liability|0-25%|

|**Deferred Tax**|20.6|Eliminated in liquidation|0%|

|Leases|2.7|Negotiate termination|50%|

|Other|6.0|Partial settlement|50%|

Base Case Forced Liquidation:

- Asset Proceeds: €129.4M

- Liabilities Paid: €69.5M

- Net to Equity: €59.9M (36% of book)

### B. Orderly Wind-Down (6-12 months)

#### Improved Recovery Rates

- Receivables: 85% (vs 65% forced)

- Inventory: 55% (vs 35% forced)

- PP&E: 45% (vs 30% forced)

- Total Proceeds: €177.0M

Base Case Orderly Liquidation:

- Asset Proceeds: €177.0M

- Liabilities Paid: €69.5M

- Net to Equity: €107.5M (65% of book)

### Liquidation Value Summary

|Scenario|Timeline|Equity Value Range|Base Case|% of Book|

|---|---|---|---|---|

|Forced Sale|Immediate|€43-62M|**€60M**|36%|

|Orderly Sale|6-12 months|€91-110M|**€108M**|65%|

---

## 3. Discounted Cash Flow Analysis

### DCF Assumptions

- WACC: 18% (reflects high country risk in EUR terms)

- Terminal Growth: 2% (modest EUR growth)

- Tax Rate: 25%

- Recovery Scenario: Assumes Q1 2025 weakness is temporary

### Revenue & EBITDA Projections

|Year|Revenue (€M)|Growth|EBITDA Margin|EBITDA (€M)|

|---|---|---|---|---|

|2025|239|-20%|18%|43|

|2026|275|+15%|19%|52|

|2027|303|+10%|20%|61|

|2028|318|+5%|21%|67|

|2029|334|+5%|22%|73|

### Free Cash Flow Analysis

|Component|Value (€M)|

|---|---|

|PV of Cash Flows (2025-2029)|105|

|Terminal Value|288|

|PV of Terminal Value|126|

|**Enterprise Value**|**231**|

|Less: Net Debt|(15)|

|**Equity Value**|**€216M**|

### DCF Sensitivity Analysis

||Terminal Growth|

|---|---|

|**WACC**|**1%**|

|16%|€245M|

|18%|€196M|

|20%|€161M|

---

## Risk Factors Impacting Valuation

### Downside Risks

1. Currency Crisis: Further TRY depreciation could erode EUR values

2. Q1 2025 Trend: -35% revenue decline may indicate structural issues

3. Political Risk: Turkish economic policy uncertainty

4. Competitive Pressure: Local and import competition

5. Inflation Impact: Cost pressures on margins

### Upside Potential

1. Market Recovery: Construction sector rebound post-election

2. Export Growth: Leverage weak TRY for exports

3. Operational Excellence: Margin improvement to historical levels

4. Currency Stabilization: Potential TRY recovery

5. Strategic Value: Synergies with Deceuninck network

---

## Valuation Conclusion

### Recommended Range by Buyer Type

|Buyer Type|Likely Valuation|Rationale|

|---|---|---|

|**Financial Buyer**|€175-200M|Focus on cash flows, high risk discount|

|**Strategic Buyer**|€200-250M|Synergies partially offset country risk|

|**Management Buyout**|€150-180M|Limited financing availability|

|**Distressed Sale**|€45-100M|Depends on urgency and structure|

### Key Valuation Metrics

- EV/EBITDA (2024): 3.3x at midpoint

- P/B Ratio: 1.2x at midpoint

- P/E (2024): 10.5x (normalized)

### Final Recommendation

Fair Value Range: €180-220M

- Reflects significant Turkish risk discount

- Accounts for Q1 2025 performance concerns

- Assumes business stabilization in 2H 2025

- Strategic premium for market position

Most Likely Transaction Range: €190-210M (depending on buyer type and deal structure)