First Berlin – M1 Kliniken AG Research Update (01/11/2017)

First Berlin Equity Research has published a research update on M1 Kliniken AG (ISIN: DE000A0STSQ8). Analyst Christian Orquera reiterated his BUY rating and increased the price target from EUR 10.80 to EUR 16.50.

M1 Kliniken AG (M1) has raised new capital of €16.5m through the placement of €1.5m shares at €11.0 each. The placement process was accelerated due to oversubscription. The company intends to use the proceeds to finance faster expansion of its clinic network. H1 2017 results published two months ago were strong and came in ahead of our expectations. Due to the expansion of the clinic network across Germany, H1 sales, operating profit (EBIT) and net income showed significant increases y/y. Sales grew 20% to €22.3m (FBe: 22.0m) and the operating margin widened to 18.7% (FBe: 15.0%). We believe management intends to capitalize on this strong momentum. We anticipate that M1 will grow faster than we had previously projected and are upgrading our sales and EBIT estimates for the period 2017 and beyond. In addition, we believe the operational risk has declined over the last half year. We have consequently lowered our WACC estimate by 1.5 percentage points to 10.5% (previously: 12.0%). Our updated DCF-model now yields a price target of €16.50 (previously: €10.80). Our rating remains Buy.