Belimo UBS Evidence Lab inside: A more constructive view on market share gains, upgrade to Neutral

Research evidence excerpt

Belimo UBS Evidence Lab inside: A more constructive view on market share gains, upgrade to Neutral

CHF)

From To % ch Cons.

shares. Moreover, these anticipated market share gains also more than offset our still

12/26E 19.30 19.32 0 19.05

expected growth moderation in the capacity build-up of DCs over time. Hence, we

12/27E 22.55 23.16 3 22.66

forecast average (FY26-30E) organic sales growth of around 20% (p.a.) for Belimo's DC

12/28E 23.84 27.15 14 26.03

exposure. For the company's non-DC construction sub business (76-77% of group

sales), we maintain a broadly unchanged estimated growth of around 9% (p.a.). Sebastian Vogel, CFA

Analyst

Profitability a function of operating leverage sebastian.vogel@ubs.com

+41-44 239 90 45

We anticipate that Belimo can expand its EBIT (UBS adj.) margin to around 25.6% by

FY30E. Hence, we expect ample support from operating leverage to its profitability on Patrick Rafaisz, CFA, FRM

the back of our forecasted sales growth trajectory. Moreover, we see higher operating Analyst

patrick.rafaisz@ubs.com

margins at its DC exposed business, compared to its underlying construction related

+41-44-239 90 66

exposure. Hence, the pronounced sales growth that we expect for that sub business also

prepares the ground for mix-driven margin benefits, in our view.

Valuation: Raise 27-28E EPS by 3-14%, raise DCF-derived PT to CHF827

We reflect our revised near-term and medium-term forecasts in our valuation. Since we

mainly increase our expectations for FY28-30E, this also raises the jumping-off point for

our fade and terminal period and contributes to our revised DCF-derived PT of CHF827

for Belimo. Thus, while our long-term assumptions for terminal sales growth/WACC

remain at 2.5%/7.0%, respectively, our revised FY30E EBIT forecast also impacts our