RENK Group: Above on margin, long on duration - initiating at Outperform

Research evidence excerpt

RENK Group: Above on margin, long on duration - initiating at Outperform

Pal Skirta +49 69 717 4861 pal.skirta@bernsteinsg.com 22 July 2026

The market treats Ukraine exposure as a binary bet on the war continuing. We think it has the scenario backwards. RENK’s near-

term earnings are insulated by a contracted backlog that runs to 2027/28 - peace headlines move the share price, they do

not move the immediate P&L. More importantly, we think a ceasefire is a net positive, not a negative: active-conflict aftermarket

demand fades, but is replaced by a larger and more durable reconstruction-and-industrialization cycle as Ukraine rearms and

localizes production. The decisive nuance is that this is increasingly an original-equipment channel, not merely spares - evidenced

by a Memorandum of Understanding between RENK America and Ukroboronprom covering HMPT 800 prototype transmissions

for an indigenous Ukrainian IFV development program, reinforced by planned local maintenance hubs. We surfaced this from

Ukrainian defense media; to our knowledge this detail has not featured in mainstream financial news flow. We think the market

might be selling the wrong scenario on potential ceasefire news flow and our actionable idea is that any price correction

on this news flow could be a compelling entry point.

Our Ukraine thesis was corroborated by RENK management during our recent discussions. Importantly, management

indicated RENK had effectively no Ukraine aftermarket exposure until Q4 2025 - supporting our actionable idea that news

flow around a (potential) ceasefire or peace deal would have no material P&L impact, and that share-price weakness

on such news flow could be an attractive entry point. Crucially, management also signaled that no Ukraine OE or aftermarket