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 22.00 to EUR 21.00.
Management cautioned while reporting strong Q1 22/23 numbers that the business environment had deteriorated during the first six weeks of the crucial Christmas quarter due to continuing inflationary pressures and reduced consumer purchasing power. While Q2 22/23 sales of €142.0m (FBe: €141.3m; Q2 21/22: €132.7m) was in line with our forecast, EBIT of €12.5m (FBe: €11.1m; Q2 21/22: €17.6m) was 12.8% above our projection due to robust performance from the East Central Europe segment. Management has maintained full-year EBIT guidance of €20.5m to €22.5m (after the €4.4m charge for restructuring of operations in France). SWA has already booked EBIT of €20.8m during the first six months of 22/23. Profitability during the second half of SWA’s financial year is weaker than during the Christmas quarter but we think the company is well capable of generating the EBIT of €0.7m required to reach the midpoint of guidance. We have made only minor changes to our forecasts for 2022/23 and subsequent years, but have lowered our price target from €22.0 to €21.0 to reflect a 40 basis point increase in the German long-bond yield since our last note of 15 November. We maintain our Buy recommendation.