UBS: Fast Take: Zehnder Group AG "Org. separation of European ventilation an..."

Research evidence excerpt

UBS: Fast Take: Zehnder Group AG "Org. separation of European ventilation an..."

Forecast returns

Forecast price appreciation 38.9%

Forecast dividend yield 2.9%

Forecast stock return 41.8%

Market return assumption 5.2%

Forecast excess return 36.6%

Company Description

Zehnder Group, headquartered in Gränichen, Switzerland, is a leading manufacturer of

premium indoor climate solutions ranging from ventilation and cooling systems to heating

solutions such as radiators. The company has production plants located in Europe, China and

North America. FY24 revenues were generated in EMEA (80%), North America (16%) and

APAC (4%). Of the company's two divisions, the Ventilation division accounted for c60% of

revenues and c90% of EBIT while the Radiator division accounted for the remainder. Zehnder

employs around 3,500 employees globally.

Valuation Method and Risk Statement

Our price target for Zehnder is based on a DCF approach (2.0% terminal growth,

9<mark>.3%</mark> WACC), cross-checked with relative valuation multiples. Building

material and construction companies like Zehnder are by their nature exposed to national

building cycles which are influenced, in our view, by the level of interest rates, the rate of

growth of GDP, employment growth, population growth and the general conditions of

buildings and infrastructure (both public and private). Besides, the growth in low-energy

standard housing increases the need for healthy indoor climate and thus ventilation, thus

sales are also driven by regulatory requirements. Zehnder's sales are also sensitive to selling

prices, which can vary as capacity and demand levels fluctuate. Costs can be impacted by

energy costs, labor costs and other raw material costs (mostly steel, aluminum, electrical