KME – new numbers, same thesis.
All,
Please find our updated Q3 20 analysis on KME here.
We remain long the bonds with 5% of NAV. The recent extension of the EUR300m KME factoring facilities and the EUR150m KME Mansfeld receivables facilities to Feb 23 from Feb 21 provides further comfort on the liquidity front. We also expect the SACE loan to materialize, given KME’s status as an R&D-intensive exporting business, and its strategic importance as a defence supplier in the US and Europe. In this context, and with European Manufacturing PMIs and the Copper value chain clocking multi-year highs, we see the business recovering very quickly while maintaining its high EV/EBITDA multiples.
The recently approved Intek warrants issue, with a strike price of EUR0.4 not far from the current stock price of 0.346, also suggests further potential support from shareholders and the possibility of building further equity cushion at the Holdco level.
Please feel free to reach out if you would like to exchange ideas on the name.
Juliano
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