Original-Research: Deutz AG (von Quirin Privatbank Kapitalmarktgeschäft): Buy
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Original-Research: Deutz AG - from Quirin Privatbank Kapitalmarktgeschäft
Classification of Quirin Privatbank Kapitalmarktgeschäft to Deutz AG
Climing up the growth path despite geopolitic uncertainties Deutz had a good start into the new FY25 indicated by the strong order intake of Q1/25 of EUR 546.1m (+30.3% yoy). We expect DEZ to gain growth momentum in FY25e. Revenues in FY25 will be supported by the consolidation and integration of the recent acquisitions like blue star power systems in the US and the distribution activities of RRPS. We expect service revenues continue to rise in FY 25. Those effects might compensate the ongoing weakness in the core engine business mainly related to the cyclical pattern in main distribution industries like construction and agriculture machinery. We expect FY 25 revenues to rise by about 25% yoy to EUR 2,275m. Adj. EBIT should reach EUR 117.5m. The adj. EBIT margin of 5.2% is diluted by the cyclical weak engine business but get a steady and strong support by the rising proportion of service sales. Despite a 29% US revenue proportion DEZ might not be largely impacted by potential tariffs. DEZ delivers engines and spare parts mainly into specific applications and long-term projects. Another important growth factor going forward might be a higher revenue share into the military and security industry. The current revenue proportion of just below 2% (equipped with higher margins) might quickly start to double. DEZ share had a good run since early 2025 and has closed the valuation gap to a certain extend. Nevertheless, the current valuation is still characterized by low multiples (FY26e: EV/EBITDA 4.7x) and sharp discounts to the international peers. The multiple peer valuation is largely supported by our DCF value. We raise our TP to EUR 9.00 (previous EUR 8.00) and stick to the BUY Rating. You can download the research here: http://www.more-ir.de/d/32444.pdf For additional information visit our website: https://research.quirinprivatbank.de/ Contact for questions: Quirin Privatbank AG Institutionelles Research Schillerstraße 20 60313 Frankfurt am Main research@quirinprivatbank.de https://research.quirinprivatbank.de/
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2130184 05.05.2025 CET/CEST
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