0R15 8884.0068 1.4156% 0R1E 9171.0 0.0% 0M69 None None% 0R2V 255.5 0.3929% 0QYR 1619.0 0.0% 0QYP 434.5 -0.344% 0RUK None None% 0RYA 1600.0 4.5752% 0RIH 195.2 1.3763% 0RIH 195.2 1.3763% 0R1O 225.5 9877.8761% 0R1O None None% 0QFP None None% 0M2Z 255.0 0.2457% 0VSO 33.3 -6.4738% 0R1I None None% 0QZI 596.0 0.0% 0QZ0 220.0 0.0% 0NZF None None% 0YXG 236.3943 1.5483%
RHI Magnesita N.V. (LON: RHIM) – Will Deliver an Adjusted EBITA of €310 million for FY21
RHI Magnesita N.V. is an FTSE 250 listed global leader in refractories having its presence across several locations around the world. Moreover, the Company has a vertically integrated value chain right from raw materials to refractory products and full performance-based solutions. RHIM’s customers are from various industries like steel, cement, non-ferrous metals, and glass.
(Source: Company presentation)
Recent trend of Dividend Payments
The Company will pay an interim dividend of 50 euro cents per share on 14 September 2021, with an ex-dividend date of 26 August 2021. Moreover, the Company had declared an H1 FY21 interim dividend equivalent to one-third of the total dividend paid during FY20, benefited by the strong business performance and confidence in the outlook over the second half of 2021.
(Source: LSE; Analysis done by Kalkine Group)
Growth Prospects
Key Risks
Now, we will analyse the Key Fundamental Statistics & Shareholding Pattern of RHI Magnesita N.V.
MSP Foundation is the most significant shareholder as it holds nearly 13.33 million shares as of 30 June 2021.
H1 FY21 Financial & Operational Highlights (for the six months ended 30 June 2021, as of 28 July 2021)
(Source: Company result)
Financial Ratios (H1 FY21)
Share Price Performance Analysis
(Source: Refinitiv; Analysis done by Kalkine Group)
On 06 September 2021, at 09:46 AM GMT, RHIM’s shares were trading at GBX 3,768.00, down by around 0.27% from the previous day closing price. Stock 52-week High and Low were GBX 4,762.00 and GBX 2,398.00, respectively.
From a technical standpoint, RHIM is hovering between the lower Bollinger band and the middle Bollinger band, indicating an upside potential in the stock price. Moreover, the 14-days RSI of ~39.08 is supporting an upside momentum in the stock price.
Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)
Business Outlook Scenario
The Company had shown accelerated recovery in demand levels with strong order book visibility for 2022. However, RHIM also incurred higher freight costs caused by supply chain disruptions during H1 FY21. Furthermore, the Company remained on track to achieve adjusted EBITA of €310 million for FY21, with earnings weighted towards H2 FY21. The working capital is forecasted to be ranging from 15.0% to 18.0% for FY21. Meanwhile, RHIM had anticipated reducing the net debt in H2 FY21 due to the receipt of €96 million post-tax proceeds from the Magnifin disposal and robust cash flow from operations. Overall, the Company would generate regular long-term returns for the shareholders with strong dividend payout, efficient cost management and strategic sales initiatives.
Considering the decent H1 FY21 financial numbers, strong contribution from strategic sales initiatives, various projects to reduce costs, consistent dividend payments, strong dividend yield, and support from the valuation as done using the above method, we have given a “BUY” recommendation on RHI Magnesita N.V. at the current price of GBX 3,768.00 (as on 06 September 2021 at 09:46 AM GMT), with lower-double digit upside potential based on 13.06x Price/NTM Earnings (approx.) on FY21E earnings per share (approx.).
*The reference data in this report has been partly sourced from REFINITIV.
*All forecasted figures and Peer information have been taken from REFINITIV.
*Dividend Yield may vary as per the stock price movement.
*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.
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