Redcare Pharmacy (RDC) reported solid Q3 results. The company achieved strong sales growth of 67% yoy in Q3, in line with its preliminary release, driven by the acquisition of MediService as well as organic growth of 26% yoy. The adj. EBITDA margin (ex MediService) improved 3.2ppt yoy in Q3 on sales/marketing efficiencies, which took the 9M margin to 2.9%, closer to the upper end of the company’s 1.5-3.0% target range for ‘23. Given good progress in 9M, management has retained its ‘23 guidance, which AlsterResearch’s analysts think is conservative, particularly with respect to sales, as Q4 has seasonally been the strongest quarter for the company. AlsterResearch’s analysts believe that RDC is well positioned to continue its growth trajectory over the coming years, benefiting from the growing popularity of online purchases, increase in demand for healthcare products, and the introduction of e-Rx in Germany and its rapid adoption by doctors. AlsterResearch reiterates the BUY rating on the stock with an unchanged PT of EUR 120.00. The full update can be downloaded under https://www.research-hub.de/companies/Redcare%20Pharmacy%20N.V.

BASF published weak Q3 2023 results, with revenues and EBIT excluding special items (ex-SI) missing consensus by 11% and 4%, respectively. As with other chemical companies, the operating environment remains challenging for BASF. Prices and volumes saw declines amid weak end-user demand. While management has confirmed its 2023 guidance, it now expects sales and EBIT ex-SI to reach only the lower end of the range, which still makes the Q4 target look ambitious. The outlook commentary also cautioned about further downside risks to volumes and a stronger price reduction if chemical production does not stabilise amid current macro headwinds, heightened geopolitical tensions, and pressure on raw material prices. That said, with no recovery in sight in the immediate future, BASF has trimmed its capex budget for 2023-2027, which should be viewed positively. Moreover, management is confident of delivering on its cost savings plan (c. EUR 1.1bn annual savings by end-2026), which should support the bottom line. AlsterResearch’s analysts adjust their estimates and reiterate their BUY rating at a reduced PT of EUR 57.00 (old: EUR 60.00). AlsterResearch’s analysts note that investors can take comfort in the high dividend yield, which in their view, reduces downside risk.

Fuchs SE (Fuchs) reported reasonable results in Q3. Reported sales fell 4% short of consensus, largely due to FX headwinds, whereas Q3 organic growth of 4% yoy was broadly in line with expectations. EBIT surprised positively by 5% and improved by a notable 180bps yoy to 12.9%, reflecting better gross margin. Overall results benefitted from price increases undertaken over the course of 2022, modest volume growth, and recent moderation in raw material prices. The other bright spot was free cash flow, which soared to EUR 330m in 9M (+EUR 166m in Q3 on net working capital release) vs outflow in the prior year 9M. This also prompted the company to raise its FCF guidance for 2023 by 27% to EUR 380m. However, despite the good progress in 9M, management reiterated its revenue and EBIT guidance for 2023, which AlsterResearch believes is conservative, a guidance beat in Q4 seems likely. AlsterResearch acknowledges that near-term challenges persist; yet, structural growth drivers should pivot Fuchs towards its targeted EUR 500m in EBIT by 2025 and 15% in EBIT margin in the long term. AlsterResearch reiterates the BUY rating at an unchanged price target of EUR 43.00. The full update can be downloaded under https://www.research-hub.de/companies/Fuchs%20Petrolub%20SE

As forewarned by MTU on September 11, MTU's 18% share in the geared turbofan (GTF) programme with Pratt & Whitney, which has run into trouble because of material defects, resulted in a drag of c. EUR 0.97bn on Q3 and 9M 2023 sales and EBIT. However, adjusting for exceptional charge relating to GTF, underlying business trends remained healthy. Adjusted (adj.) revenues were up 12% yoy (1% miss) and adj. EBIT rose 22% yoy in Q3, registering a 2% beat vs consensus. Management has reiterated its adj. revenue and adj. EBIT guidance for 2023. It is also confident of reaching its 2025 target of EUR 8bn in revenue and EUR 1bn in adj. EBIT. AlsterResearch believes that fundamental drivers for MTU remain strong, including high commercial aircraft production rates, a favourable narrow body market, robust military business, and healthy MRO and aftermarket demand. Given the one-off nature of the GTF inspection, AlsterResearch sees the current price level as a good entry point for investors who want to participate in such a high-quality business case. The analysts reiterate the BUY rating at an unchanged price target of EUR 230.00. The full update can be downloaded under https://www.research-hub.de/companies/MTU%20Aero%20Engines%20AG

In Q3, Knorr-Bremse reported solid top-line performance, with the order intake increasing to EUR 2.0bn (+5.4% yoy) driven by strong demand. At the end of Q3, the order book grew 4.6% yoy to a record EUR 7.2bn. Solid sales growth across both segments (RVS and CVS) resulted in sales rising 8.2% yoy to EUR 1,939m (consensus estimate: EUR 1,890m). EBIT surged 11.5% yoy to EUR 223m (ahead of consensus estimate: EUR 218m), and EBIT margin expanded 30 bps yoy to 11.5%. The solid operating performance was powered by higher sales and the successful implementation of cost-control measures. Q3 EPS came in at EUR 0.79 per share, down 12.2% yoy due to higher interest expenses in Q3 23. However, Free cash flow jumped approx. 6x to EUR 230m (Q3 22: EUR 38m), with the cash conversion rate rising to 167.8% (Q3 22: 25.5%) due to improved working capital and larger customer payments. Knorr-Bremse reaffirmed its FY 23 guidance with revenue between EUR 7.5-7.8bn, operating EBIT margin of 10.5-12.0%, and free cash flow of EUR 350m-550m. AlsterResearch reiterates to BUY with unchanged PT of EUR 75.00. The full update can be downloaded under https://www.research-hub.de/companies/Knorr%20-%20Bremse%20AG

HelloFresh’s (HF) Q3 results were a mixed bag. Revenue growth accelerated yoy in c.c., yet a stronger EUR was a drag. Higher marketing (although it was expected) and general overheads and procurement costs ratio resulted in weaker adj. EBITDA margin, despite HF achieving fulfillment efficiencies. Revenues and adj. EBITDA both fell short of consensus in Q3. However, the company did well in terms of free cash flows, generating inflow of EUR 44.5m in 9M 2023 vs outflows of EUR 46.7m in 9M 2022. Management is confident of revenue growth and profitability re-accelerating in Q4. This based on several factors including the recently opened production facility in Arizona, unit economics, debottlenecking of production capacity in the U.S., and an increase of the product range. After estimates revision AlsterResearch comes to a new PT of EUR 28.00 and upgrades to BUY after the recent drop in share price. The full update can be downloaded under https://www.research-hub.de/companies/research/HelloFresh%20SE

UniDevice reported still weak Q3 results amid depressed consumer sentiment and real income losses in Germany. Against high comparables, revenues declined by 34% yoy to EUR 94m. Similarly, EBIT effectively halved yoy to EUR 0.9m in Q3. On a positive note, momentum is clearly improving compared to a weak H1. In fact, gross margins are improving sequentially (1.9% in Q3 vs. 1.6% and 1.8% in Q1 and Q2, respectively), leading to a Q3 result as high as the first two quarters of 2023 combined. Moreover, the isolated October sales figures of +15% yoy point to a resumption of growth in Q4, which increases AlsterResearch’s confidence that UniDevice will still end the year with decent earnings. As a result, the analysts expect UniDevice to remain an attractive dividend payer (eAR: '23 divi yield of 12%). With a '23E P/E of ~7x, AlsterResearch reiterates its BUY rating with a slightly adjusted PT of EUR 2.50 (old EUR 2.70), offering upside of more than 150%. The full update can be downloaded under https://www.research-hub.de/companies/UniDevice%20AG.

Kion Group reported detailed Q3 results that were in line with its preliminary release. The company saw healthy growth in its Industrial Trucks & Services (ITS) division, while its Supply Chain Solutions (SCS) division faced a decline in revenue. Kion’s adjusted EBIT had beat expectations by a wide 17% at the time of prelims, driven by the outperformance of the ITS segment, which benefitted from better pricing, easing supply chain concerns, and agility measures. Management has confirmed its recently revised guidance for 2023, lowering its revenue estimate, while increasing its forecast for adjusted EBIT, FCF, and ROCE, primarily due to a more positive outlook for ITS. Overall, the company’s performance has been positive so far in 2023. The only concern is the weak Q3 order intake, leading to a 14% yoy decline in the order backlog. AlsterResearch maintains the BUY recommendation with a new price target of EUR 46.00 (old: EUR 49.00). The full update can be downloaded under https://www.research-hub.de/companies/Kion%20Group%20AG

Nemetschek published detailed Q3 2023 results that were in line with its preliminary release. The results had surprised positively in terms of revenues and EBITDA, clocking a 4% and 13% beat, respectively. Good operational development in Q3 on the back of a steady transition to subscription and SaaS models, catch-up effects from Q2 2023, and one-off effects of stronger-than-planned license sales in the Design and Build segments contributed to the higher-than-expected growth and augmented the EBITDA line. Management has reiterated its recently updated guidance for 2023. As the Q3 numbers were largely driven by one-time effects, AlsterResearch’s analysts believe it is premature to assume a comprehensive, structural recovery in Nemetschek’s customer industries. The construction sector still suffers from several headwinds as well as cost inflation, and the low expected economic growth is likely to keep demand constrained. The experts maintain their recently adjusted estimates and reiterate the HOLD rating on the stock at an unchanged target price of EUR 61.00. The full update can be downloaded under https://www.research-hub.de/companies/research/Nemetschek%20SE

Stratec’s Q3 results were impacted by normalizing demand for molecular diagnostic systems following excess capacity build during the COVID-19 pandemic, and persistent inventory destocking by customers. Citing tepid demand for molecular diagnostics instrumentation solutions, management has cut its 2023 sales guidance, now expecting it to decline slightly yoy on a constant currency basis (vs previous estimate of flat or increase slightly yoy), while it maintained its adjusted EBIT margin forecast of 10%-12%. Although sales recovery is likely to be slower than anticipated earlier, multiple earnings improvement measures that Stratec is undertaking, should boost profitability metrics. Thus, this could be a good time to get exposure to an investment case that is about to recover from its COVID-19 hangover. With some fine-tuning of their assumptions, AlsterResearch reiterates the BUY rating with a lower price target of EUR 58.00 (old: EUR 62.00). The full update can be downloaded under https://research-hub.de/companies/research/Stratec%20SE