Berenberg initiates Steico with "hold" after strong rally

Steico SE

09/11/2021 08:15

** Berenberg initiates coverage of Steico  ST5G.DE  with a
"hold" rating after strong rally 
    ** The broker notes that since the beginning of the year,
Steico's shares have risen by 93% and that the underlying market
tailwinds and Steico's revenue growth prospects are fully priced
in
    ** The broker says that the company, which offers ecological
insulation materials, is currently in the process of increasing
its capacity by 60% up until 2023 versus its 2020 level
    ** "By adding new lines to its existing production
facilities in Poland and France, as well as a greenfield
investment in Poland, we expect Steico to be able to grow its
revenues by about 17% per year, to about EUR 487 million 
($562.68 million) in 2023", Berenberg says
    ** Insulation materials are currently in high demand as
construction activity is recovering from its COVID-19-driven
decline in 2020 and lockdowns have shifted people's focus onto
improving their homes, the brokerage adds
    ** Berenberg says some of Steico's peers are also investing
in new capacity at the moment and this potential overcapacity by
2023 will likely create margin pressure for the company
    ** At the same time, the industry is facing raw material
price increases, driven by the pandemic, with limited visibility
in the short term, Berenberg says
    ** Out of 5 analysts that cover Steico SE, three rate the
stock "strong buy" or "buy"​, two rate "hold" and no analysts
rate the stock "strong sell" or "sell"
    



($1 = 0.8655 euros)

 (Reporting by Joanna Jonczyk-Gwizdala)
 ((joanna.jonczyk@tr.com))