101020 Kendrion - A Magnetic Future? 101020 Kendrion - A Magnetic Future?

Kendrion has a magnetic future and shareholders of the company could have such a future as well. Firstly, it has ample room to grow its business organically. Excluding acquisitions a sharply higher share price is already justified. Secondly, when the company has a new financing arrangement in place it could give an additional boost to its valuation by making acquisitions. It targets to acquire EUR100m worth in revenues for approx 1 times sales and 6 to 6.5 times income from profits. Any investor must fell magnetized to such an investment case.

090414 Kendrion - company visit note 090414 Kendrion - company visit note

Company visit note.

101209 Kendrion - New financing arrangement in place 101209 Kendrion - New financing arrangement in place

Now with a new financing agreement in place Kendrion could give an additional boost to its valuation by making acquisitions. The current credit facility restricted the possibilities of acquisitions unless the company was willing to present an enormous equity issue to its shareholders. For more details we like to refer to our report of October 21st 2010 "Kendrion | a magnetic future".

091223 Kendrion to start operations in India 091223 Kendrion to start operations in India

In an interview management of Kendrion stated it intends to enter the market in India and targets 40% of its revenues outside of Europe in 3 years. To realize this target in geographical sales breakdown the company is condemned making acquisitions in North America.

110906 Kendrion | living on CO2 110906 Kendrion | living on CO2

No. pages 8
Description Kendrion convinced us that for the near term organic growth could remain above the threshold of 10%. Particularly the opportunities in Passenger Car Systems are huge. This business unit operates in the sweet spot of engine technology aimed at reducing the CO2 emissions per vehicle. Despite its share price appreciation of approx 65% since we issued our in-depth report 'Kendrion | magnificent magnetic future' we remain upbeat.
  • Organic growth to remain double digit
  • Reduction in CO2 emmissions driver for Passenger Car Systems
  • Ambitious growth target within reach
  • Outcome European Commission's fine expected shortly
  • Conclusions

111229 Kendrion | acquisition of FAS Control 111229 Kendrion | acquisition of FAS Control

No. pages 3
Description Not only will the acquisition of FAS Control contribute immediately to the earnings per share of Kendrion and deliver an initial return on investment of approx 13%, moreover, the takeover will offer ample opportunities for its business unit Car Passenger Systems to grow.
  • creating a platform to conquer the US market
  • estimated financial details
  • strategic importance
  • conclusions

130507 Kendrion | acquisition of Kuhnke 130507 Kendrion | acquisition of Kuhnke

No. pages 5
Description Although the acquisition of Kuhnke does not lower the exposure to the Automotive segment and Germany we cheer management of Kendrion it has added the activities of one of its nearest competitors to its portfolio. All long-term growth drivers remain in place which will offer Kendrion ample opportunity for high organic growth, strong profitability and excellent ROI. The acquisition combined with the improved organic performance should set the shares to record highs.
  • 'entering another league'
  • conclusions

140401 Kendrion | financial objectives to be realized for a prolonged period 140401 Kendrion | financial objectives to be realized for a prolonged period


No. pages 11

In the next couple of years Kendrion will return to its financial objectives. The company has secured numerous new projects of which the order to produce solenoid valves for the damper business - its largest contract in history - is the most eye-catching one. High organic growth, strong profitability and excellent ROIC for a prolonged period will bring from the current share price an attractive long-term investment return to its shareholders.

  • Kuhnke's contribution to last year results
  • Automotive division hit by one-off setbacks
  • financial objectives still realistic and well within reach
  • other growth opportunities
  • impact EU fine on debt cover
  • valuation
  • conclusions

150911 Kendrion | magnetic moment still strong 150911 Kendrion | magnetic moment still strong

No. pages 13

The company's 2Q/1H15 results were not received well by the investment community. The reasons for disappointment were its organic growth of only about 2% and the decline in EBITAE of some 7%.

Should the outcome of one single quarter change our long-term view on Kendrion?

The result of a single quarter hardly changes our long-term view. Nevertheless we have reassessed our investment case. Although we have taken a more conservative approach we remain upbeat on the company's future and thus investment case.

In this report we will analyse Kendrion's interim results. Thereafter the company's strategy and financial targets will be discussed. Lastly we will share our view and assumptions on Kendrion, resulting in our fair value assessment for its operations.


1. Introduction
2. 2Q/1H15 results not one of its best
3. Mid-term plan: "Focus on markets, markets in focus"
4. New CEO proposed
5. Valuation
6. Summary and conclusions

160405 Kendrion | focus on restoring profitability 160405 Kendrion | focus on restoring profitability

No. pages 19

On May 3rd, Kendrion will provide a strategy update, including a review of its short and long-term financial objectives. Despite our belief that a couple of its targets are likely to be adjusted downward, we cheer these revisions. These likely to be revised goals provide a much more realistic picture of the future. Overall we expect the market will be pleased with the outcomes of the strategy update. These outcomes are not a  trigger for short-term outperformance. However, it does provide an excellent platform for the future. Therefore, for the long run we still believe Kendrion is a strong investment case.


1. Introduction
2. Kendrion's general financial objectives and mid-term targets
3. Kendrion's new financial objectives and mid-term targets
3.1 revenue and organic revenue growth targets
3.2 EBITA-margin and ROIC target
3.3 healthy free cash flow target
3.4 solvency and dect cover target
3.5 pay-out ratio
3.6 summary and conclusions
4. A greater emphasis on profitability
5. Valuation
6. Summary and conclusions
7. Appendix

160520 Kendrion | revised financial targets ahead of our estimates 160520 Kendrion | revised financial targets ahead of our estimates

No. pages 14

On April 5th we issued a report on Kendrion ahead of its strategic update at the start of May. In that report we reviewed the company's financial objectives. We stated that we foresaw the company to revise two of its targets downward and leave all other ones unchanged.

At the presentation Kendrion's management stated to deliver an underlying EBITA-margin of 10% as from the end of 2018 and to record an organic revenue growth of on average 5% for the next three years.

These two adjustments are bang in line with our predictions. However, management was indicating financial performance could improve beyond 2018. It was most outspoken on the organic revenue growth. The company said it believed this ratio could accelerate beyond 2018.

On basis of Kendrion's projections we have fine-tuned our DCF-model. As a results we have raised our fair value per share mainly due to the steeper increase of its profitability.


1. Introduction
2. Kendrion's financial objectives
2.1 organic revenue growth of 5% on average
2.2 EBITA-margin of 10% as from the end of 2018
2.3 ROIC target to be achieved as well by 2018
2.4 all in all more realism
3. Valuation
4. Summary and conclusions
5. Appendix

190702 Kendrion | realistic though challenging targets for 2023 190702 Kendrion | realistic though challenging targets for 2023

No. pages 24
When Kendrion presented its 2018 first half year results on August 15th 2018, it provided a strategic update for 2019 - 2023 as well. The long-term goals Kendrion set were:

• a Return on Investment - before potential acquisitions - of more than 20.0% in 2023,
• an EBITDA-margin of more than 15% in 2023 and
• an unchanged dividend policy of maintaining a pay-out ratio of 35% to 50% of net profit.

Despite these alluring prospects, the share price is currently trading at a 5 year low due to disappointing results after the release of these financial objectives.

In this note we will start by analysing the company's long-term goals by determining what kind of organic revenue growth the company should achieve to deliver upon its guidance.

To judge whether or not it is likely Kendrion will be able to achieve this required organic revenue growth rate for the next 5 years, we will first take a glance at the company's historic performance, the performance of its peers and determine the main growth drivers for the industry.

To take a conservative stance, we have run a scenario whereby the organic revenue growth will be at half the required level to achieve its 2023 financial goals.

For these two scenarios we have calculated the present value of the company's operations by means of our DCF model.

Lastly we will draw our conclusions and investment opinion.


1 introduction
2 Kendrion at a glance
3 long-term targets - 2023
4 organic revenue growth rate
5 organic revenue growth rate at half the targeted level
6 discounted cash flow model
7 valuation multiples
8 summary and conclusions


This publication has been prepared by the Idea-Driven Equities Analyses company B.V. (hereafter; the IDEA!) solely for information purposes to its clients.
It is not intended as an offer or solicitation for the purchase or sale of any financial instrument.
No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, except with respect to information concerning the IDEA! and affiliates, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the report.
Any investments referred to herein may involve significant risk, are not necessarily available in all jurisdictions, may be illiquid and may not be suitable for all investors. This report has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Investors should, without relying solely on this report, make their own independent investment decisions and, if necessary, seek professional advice. The value of, or income from, any investments referred to herein may fluctuate because of changes in interest rates or exchange rates, securities prices or market indices, operational or financial conditions of companies or other factors. Past performance is not indicative of future results.
Neither the IDEA! nor any of its officers or employees accept any liability for any direct or consequential loss arising from any use of this publication or its contents.
The IDEA! is a research boutique, offering its services to a select group of professional investors only and has no investment banking relationships with companies mentioned in this report.
This report may not be reproduced or redistributed, in whole or in part, by any person for any purpose without the prior written permission of the IDEA! and the IDEA! accepts no liability whatsoever for the actions of others in this respect.
The distribution of this document in certain jurisdictions may be restricted by law, and recipients into whose possession this comes should inform themselves about, and observe, any such restrictions.
In the United Kingdom this report is only intended for distribution to, and is only directed at, (i) persons who have professional experience in matters relating to investments, (ii) persons who fall within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc") of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (as amended) and (iii) persons to whom it may otherwise lawfully be distributed and any investment or investment activity to which it relates is available only to such persons. This report should not be distributed or passed on, directly or indirectly, to any other person in the United Kingdom and any other person should not rely or act on it.
This report is distributed in the United States of America solely to "major institutional investors" as defined in Rule 15a-6 (U.S. Securities Exchange Act of 1934) and may not be furnished to any other person in the United States. Each U.S. recipient by its acceptance hereof warrants that it is a "major institutional investor" as defined, understands the risks involved in dealing in securities or any financial instrument and shall not distribute nor provide this report, or any part thereof, to any other person.
Investors outside the United States and United Kingdom are encouraged to contact their local regulatory authorities to determine whether any restrictions apply to their ability to purchase investments to which this report refers.
The use of this website is governed by and shall be construed in accordance with Dutch law. As such, this product has been prepared for professional investors only as described in art. 1.1 WFT.
By using our website and/or downloading any products from this website, the user declares to qualify as such and to accept the terms of use of this website as well as the contents of this disclaimer.

Your Cart

Your cart is empty
All prices are subject to
21% VAT.

Client Login

euroirp-logo© 2011 the IDEA! | terms of use | disclaimersitemap |