Back on growth path - Berenberg starts Heidelberger Druckmaschinen with 'buy'

Heidelberger Druckmaschinen AG

29/03/2023 11:00

** Berenberg initiates Heidelberger Druckmaschinen  HDDG.DE 
with "buy" rating and TP of 2.50 euros as the German printing
and packaging solutions provider returns to growth path
     ** The broker points to increasing focus on packaging, new
subscription business, and activities in the EV charging market
as main growth drivers
    ** The broker expects the company, which operates in around
35% of the packaging printing market, to capture further market
share by entering segments such as flexible packaging
    ** It expects Heidelberger's packaging solutions segment to
grow 9% per year until 2027, vs 3% annual growth expected for
the global packaging printing industry
    ** Berenberg expects revenue from packaging business to
reach 50% of group total by FY 2024/25
    ** The broker expects the subscription model to grow to
about 10% of total revenue in next five years, from around 2%
currently, citing potential from smaller customers
    ** Berenberg says the group can reach about 30% sales CAGR
in EV charging in 2023-2030 supported by expansion into other
regions and capture of market share
    ** It notes margins from selling and servicing of chargers
are attractive for Heidelberger compared to the printing
business, as the EV market is expected to grow 26% annually
until 2030
    ** The stock rises around 5% to 1.73 euros in morning trade

 (Reporting by Paolo Laudani)
 ((Paolo.laudani@thomsonreuters.com))