First Berlin Equity Research has published a research update on Schloss Wachenheim AG (ISIN: DE0007229007). Analyst Simon Scholes reiterated his BUY rating and maintained his EUR 22.00 price target.
Q1 22/23 results showed a 7.1% volume increase, a 13.1% jump in sales to €98.0m (FBe: €93.0m; Q1 21/22: €86.7m) and a 22.7% increase in EBIT to €8.3m (FBe: €6.9m; Q1 21/22: €6.8m). The numbers beat our forecasts and are a strong start to the 2022/23 financial year for which management is guiding towards a slight decline in volume, a slight rise in sales due to price increases, and EBIT, excluding the €4.5m impact of restructuring measures in France, in the range €25m-€27m. Management has cautioned that the business environment has deteriorated during the first six weeks of the crucial Christmas quarter due to continuing inflationary pressures and reduced consumer purchasing power. However, following the Q1 22/23 results SWA looks very well placed to achieve full-year guidance even allowing for some weakening in trading conditions, and management has indeed confirmed that the projections made in the annual report still stand. Adjusted for the charges in connection with the restructuring of the French business, our own forecasts for the SWA group show only small changes. We continue to expect inflation to begin declining in 2023 and advise investors to buy SWA shares up to our unchanged price target of €22.00 in anticipation of a corresponding improvement in consumer sentiment.