Comer Industries, Equita increases target price and confirms Buy

Magis 2023 profit rises to 83 million euros Revenues 135

(Finance) – Equity has increased a 39 euros per share (from the previous 35 euros) the target price on Comer Industriesa company listed on Euronext Milan and active in the design and production of advanced engineering systems and mechatronics solutions for power transmission, confirming the recommendation on the title to “Buy“.
Analysts write that the FY23 results highlighted the ability to offset the unfavorable trend in agricultural market volumes that began in 2H23 thanks to WPG synergies it’s a Very strong FCF (+162 million euros with a conversion rate of 80%). The weakness of the AG will continue at least throughout 1H24, but the synergies of the WPG have not yet been fully exploited.

The Buy is confirmed for: brilliant track record not reflected in multiples; successful integration of the German WPG with further synergies to be exploited, which allow us to confirm above-average margins; solid financial structure debt-free ex-IFRS 16 in 2024; Visible three-digit FCF available for new M&A deals (firepower over 400 million euros, or D/EBITDA 2.5x, giving priority to the enrichment of the product portfolio, coverage of new markets and technology.

It is underlined that the 20-30% discount compared to competitors’ EV multiples is justified by the low liquidity of the stock (real float of only 11.3%) and from placement risk of One Equity Partners’ share (23.9%) which inevitably weighs on valuation and multiples.

(Photo: Towfiqu barbhuiya on Unsplash)