First Berlin – M1 Kliniken AG Research Update (05/11/2019)

First Berlin Equity Research has published a research update on M1 Kliniken AG (ISIN: DE000A0STSQ8). Analyst Christian Orquera reiterated his BUY rating and maintained his EUR 19.80 price target.

M1 Kliniken AG (M1) published H1/19 results. Sales increased by 14% y/y to €32.9m, which was lower than our projected €38.5m (H1/18: €28.9m). The main growth driver was the core beauty segment, which rose by 40% to €20.3m. However, sales within the trading segment declined by 14% to €12.6m. Given that the beauty segment is much more profitable (gross margin>70%) than the trading business (gross margin<5%), margins widened and profitability was higher than expected. Driven by a higher than anticipated other operating income of €1.5m (FBe: €120k), operating profit (EBIT) showed a significant increase y/y of 34% to €4.6m (FBe: €4.1m). Net income rose by 19% to €4.0m (FBe: €3.4m). In addition, backed by the strong network expansion in Germany (e.g. two centres for dental treatment in Frankfurt and Hamburg, a beauty centre in Dortmund) and internationally (e.g. beauty centre in Melbourne, Australia), management confirmed the positive outlook for the full year. We believe the company is on track to meet our FY/19 financial forecasts. We reiterate our Buy rating and €19.80 price target.