First Berlin Equity Research has published a research update on Schloss Wachenheim AG (ISIN: DE0007229007). Analyst Simon Scholes reiterated his BUY rating and decreased the price target from EUR 27.00 to EUR 25.00.
Q3 21/22 sales and volume were nearly flat at €70.9m (FBe: €74.6m; Q3 20/21: €71.1m) and 43.2m bottles (Q3 20/21:43.4m bottles) respectively, while EBIT came in at €-0.1m (FBe: €0.3m; Q3 20/21: €1.2m). The results were below our forecast mainly because of an 8.7% fall in volume in East Central Europe. This was occasioned mainly by a very strong comparator quarter, but also by deteriorating consumer sentiment. The extent and duration of the impact of the war in Ukraine and wider supply chain issues on inflation and consumers' purchases of Schloss Wachenheim products are hard to gauge. However, we note that management has maintained full-year 2021/22 guidance for EBIT and net profit before minorities of €26m-€28m and €18.5m-€20.5m respectively. These figures were revised up in February at the time of the Q2 21/22 results from previous numbers of €24m-€26m and €17.0m-€19.0m respectively. We have trimmed our forecasts for both 2021/22 (while remaining within management guidance) and 2022/23, but believe the share is undervalued relative to medium term recovery prospects. We maintain our Buy recommendation but lower the price target to €25.00 (previously: €27.00).
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