21.08.2012 - Equity Research Einzelstudie // kaufen

Research Report Initial Coverage - HPI AG - Buy

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Unternehmen: HPI AG
Branche: Industrie-Maschinenbau-Technologie-Automotive
Rating: kaufen
Kurs bei Erstellung in €: 20.08.2012 - 1,26
Kursziel in €: 2,30
Mögl. Interessenskonflikt gem. §34b Abs.1 WpHG und FinAnv: 5

Still on a growth course in 2012 – EBIT margin of 3.0% can be reached in 2012 –
fortunate valuation on book value level – Target price: €2.30 – Rating PURCHASE

The past FY 2011 was very successful for HPI AG. Sales revenues could be increased by 157.9% to €77.11 million. Inorganic growth was recorded for the first time due to the first time consolidation of 3KV and MRL in 2011. But even viewed organically, HPI AG increased by at a two-digit rate of 10.3%. Based on the acquisitions in the previous year,
the company’s sales revenues could be distributed onto additional pillars, which contributes
to an improved diversification.

Considerable improvements could also be made in terms of earnings. EBIT rose from €0.45 million to now €1.69 million, which represents an increase of 273.9%. Here, the acquisition of MRL has had an especially positive impact. The purchase service provider for C-parts contributed an EBIT of €1.3 million in 2011 and was largely responsible for the good performance of the group EBIT.

The company’s good development continued in Q1 2012. Sales revenues have been increased by 2.2% to €18.4 million in the first three months of the year. Among other things, the sales of subsidiaries HPI Distribution and 51% of VCE Virtual Chip Exchange in order to streamline group structure especially negatively influenced the turnover. At the same time, however, EBIT could be improved from €0.32 million to €0.38 million. The EBIT margin also
increased by 0.3 percentage points to 2.1%.

In view of the positive development in the first months, the management still expects that revenues of more than €80 million can be achieved. Given the very dynamic growth of 3KV, and the expected increase in sales of MRL, it should be possible to overcompensate the predicted decline in electronic components. As a result, we expect a turnover of €80.11
million for fiscal year 2012, however, we have not taken into account any further acquisitions.

We made the EBIT forecasts based on IAS/IFRS, as HPI AG will prepare its annual financial statement in accordance with the international accounting standards for the first time in 2012. Therefore we expect an EBIT of €2.32 million, after a similar value of €2.66 million in 2011. The slight decline in EBIT is due in particular to the omitted profit
contributions in the previous year, based on the positive special effects in the wake of the catastrophe in Japan. For FY 2013, we expect an increase in EBIT margin to 3.0% in the course of streamlining the group structure and raising synergy effects.

HPI AG is a dynamically growing company especially in the area of electronics, which wants to generate significant sales increases in the coming years, in an organic as well as inorganic way. Raising synergy effects and streamlining the group structure has also created potential for an increase in margins. With a market valuation equivalent to book value, plus a price-earning ratio of 8.2 for 2013, the company appears to be valued moderately, especially since positive operating cash flows and double-digit returns are earned on the invested capital.

We estimated a target price of €2.30 for HPI AG, which leads to a price potential of almost 100%. Against this background the rating is to BUY.


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