Final Q2 out // attractive valuation levels

Broad demand weakness, yet particularly pronounced within the boehmite market. With its high dependency on the steel industry, the Specialty Alumina segment recorded a yoy sales decline of 8%. While demand for ATH remained largely flat, boehmite continued its downward trend. With only € 4.1m sales during the first half of 2025, boehmite seems on track to reach only € 8-10m FY sales (vs. € 24m in FY21), a -22% CAGR. This is the result of significant overcapacities from Chinese Estone, resulting in lower sales prices, and the absence of demand growth as EV sales figures are far from former expectations.

Improved gross margin thanks to notably lower energy costs: +4.6pp yoy, +5.8pp qoq to 53.7%. While this trend is seen to partially level off during H2, management still expects a better gross margin than seen in Q1. With this, the mid-point of the FY25 EBIT margin guidance of 7-9% (eNuW: 8.5%) should be within reach; H1 margin: 8.4%.

Cash further increasing, adding onto the already healthy balance sheet. At the end of H1, cash stood at roughly € 91m, resulting in a € 0.4m net cash position as operating cash flow remained strong at € 20.5m (-15% yoy) and capex decreased by some € 3m to € 10.8m. As we expect higher investments during H2 (eNuW: € 21m, last tranche of its growth initiative) and more normalized payables, net debt is seen to come in at € 8m at the end of the year.

Attractive prospects during mid- to long-term. Nabaltec is able to benefit from growing demand for ATH on the back of tightening regulations across core end markets, vast investments into data centers but also Germany‘s € 500bn infrastructure spending bill. The latter is seen to also turn into a tailwind for the company‘s Speciality Alumina segment, which is strongly tied to the European steel industry. However, we would not expect notable contributions before the end of 2026e.

While current operations remain burdened, the valuation offers an attractive entry opportunity ahead of the next cyclical upswing. Shares are trading at a ~25% discount to their book value and on 7.4 EV/EBIT 2025e while also providing a healthy balance sheet, still good profitability levels and operating cash generation. As demand for its core products accelerates again, the company is poised for strong free cash flow generation. Mind you, with the completion of the current investment initiative, the company has production capacities that allow up to € 300m sales.

BUY with an unchanged € 18 PT based on FCFY 2025e.