Ending FY24 on a high note; FY25 with additional growth

2025 to show further growth carried by rising volumes as well as expected price increases. Considering generally rising production costs (raw materials, energy and labour) as well as expected sales price increase of its peers, we would expect Nabaltec to also slightly increase prices (eNuW: 3.5%). On top, demand for the company’s core product (ATH, an environmental friendly flame retardant, which is primarily used in cables and wires) is seen to remain strong. This should be driven by several trends including investments into data centres and an improving US construction industry.

Further, the gap filler is growing in importance. Sales from the white powder, that improves thermal management capabilities of adhesives used in EV batteries, should reach € 8m in FY25e. Once the current capacity expansion is completed, Nabaltec will be able to produce € 40m worth of product p.a.

All in all, Nabaltec looks well positioned to grow its top-line by a mid single-digit percentage (eNuW: 7.3%) while slightly expanding its EBIT margin. The past few quarters have underpinned the sustainability of the company's double-digit margin target.

2^nd year of growth investments no burden on the balance sheet. Following some € 30m of capex in FY24e (~ € 18m for expanding boehmite gap filler production capacities), Nabaltec is seen to spend additional € 32m in FY25e to complete the capacity expansion for gap fillers, build a fully automized warehouse and special maintenance of its Specialty Oxides production. Nevertheless, the company’s op. cash flow should once again be sufficient (eNuW € 29m) to largely cover those investments.

Valuation remains attractive. Despite macroeconomic headwinds, unlike many of its peers, Nabaltec is able to show top-line and margin growth. With some € 30m operating cash flow in FY24e and a slight net cash position, the current valuation of 8.4x PE ‘24e looks undemanding. We confirm our BUY rating with a € 25 PT, which is based on FCFY 2025e, and keep the company on out Alpha List.