Buzzi "Q2 26 preview: Puts and takes this quarter" (Neutral) Radlinger

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Buzzi "Q2 26 preview: Puts and takes this quarter" (Neutral) Radlinger

ral factors likely improved while some others worsened: (1) the EURUSD exchange 12/26E 4.74 4.72 -0 4.73

rate is trending around 1.16 YTD vs 1.20 assumed in the guide (on the FY, this could be a 12/27E 5.09 5.07 -0 5.04

2% EBITDA tailwind); (2) with oil prices having substantially declined in recent weeks, 12/28E 5.50 5.48 -0 5.34

BZU's view on H2 earnings pressure from energy costs could be reduced; (3) on the

other hand, we think US cement pricing may be trending slightly below initial mgmt Julian Radlinger, CFA

assumptions, and volumes throughout Q2 might also be slightly lower, even if we Analyst

julian.radlinger@ubs.com

wouldn't overstate this considering typically very conservative guidance setting to start;

+44-20-7901 6558

and (4) gradually rising European CO2 prices imply a higher cost to plug the allowances

gap this year (a €10/t CO2 price move would impact EBITDA by ~1%).

Big picture: still a loud debate with plenty of bulls and bears

Based on our conversations with investors, BZU remains a battleground stock. Some

investors think valuation remains attractive (on EV and price multiples) in absolute and

relative to peers HEI and HOLN unjustified given solid execution, potential for accretive

M&A or more shareholder returns (the SBB for ~2% of market cap within a few months

is already attractive). Others see less of a discount looking at FCF yield and less potential

benefit from a steepening CO2 cost curve in Europe given BZU is more of a follower on

decarbonization. We're somewhere in between these views and would add that

continued softness in (some) US cement markets also keeps us on the sidelines, as the

US remains BZU's single biggest market.

Valuation: €52 price target, DCF-based