Newag Outlook: Promising Prospects and an Outperform Rating

Better times may come soon Recommendation:

Better times may come soon Recommendation:

Outperform. Dec’24 TP: PLN25.0 With this report we are initiating issuing recommendations for Newag with the Outperform rating and the Dec’24 target price set at PLN25.0. Our baseline scenario assumes that the company / rolling stock manufacturing industry is already bottoming out the local downturn in 2022. In the coming years, we expect a gradual evolution of the Newag's revenue mix towards a greater share of sales of new products with a relatively stable (in nominal terms) contribution of revenues allocated to the rolling stock modernization and repair segment.

We see significant space for the recovery in operational margins thanks to more favourable trends of the materials and energy prices, which combined represent the bulk of costs. Finally, we emphasize that the company is a regular dividend and that its valuation ratios are not demanding (2023P P/E 10.7x and EV/2023P EBITDA 6.8x).

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Joseph Jeffriess, Market Analyst in Eightcap
Eightcap is one of the leading CFD brokers in the market, providing online trading services to a wide range of clients from around the world. They offer 1,000+ CFDs based on Forex, commodities, indices, shares, and cryptocurrencies. The well-established trading company was founded in Melbourne, Australia, in 2009, and is regulated by the Australian Securities and Investments Commission (ASIC), the Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC) and the Securities Commission of The Bahamas (SCB).

Topics

dividend energy prices target price outperform Newag Dec'24 Revenue mix Rolling stock manufacturing industry Operational margins Materials prices Valuation ratios 2023P P/E EV/2023P EBITDA.

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Better times may come soon Recommendation:

8 eightcap

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