Ori­gi­nal-Re­se­arch: B&C Spea­k­ers S.p.A. – (von GBC AG): BUY

Com­pa­ny Name: B&C Spea­k­ers S.p.A.
ISIN: IT0001268561

Re­ason for the re­se­arch: GBC Ita­li­an Cham­pi­ons
Re­com­men­da­ti­on: BUY
Tar­get pri­ce: 23.00 EUR
Last ra­ting ch­an­ge: -

Ana­lyst: Cos­min Fil­ker, N. Ripp­lin­ger

„Strong sound, even on the stock mar­ket“ Strong mar­gins, pro­mi­sing growth and an at­trac­ti­ve di­vi­dend yield al­low con­sidera­ble share pri­ce po­ten­ti­al, tar­get pri­ce: € 23.00 and BUY ra­ting

The B&C Spea­k­ers Group has fo­cu­sed on the de­ve­lo­p­ment, pro­duc­tion and dis­tri­bu­ti­on of pro­fes­sio­nal loud­spea­k­ers. Over the ye­ars, B&C Spea­k­ers Group has ad­van­ced to be­co­me a world mar­ket lea­der and pre­mi­um ma­nu­fac­tu­rer in the pro­fes­sio­nal au­dio seg­ment. The com­pa­ny pro­du­ces and dis­tri­bu­tes com­pon­ents for pri­va­te cus­to­mers on the one hand and di­rect­ly to OEMs (Ori­gi­nal Equip­ment Ma­nu­fac­tu­r­ers) on the other, with th­ree quar­ters of its tur­no­ver be­ing ge­ne­ra­ted by di­rect sa­les to OEMs. Its cus­to­mers in­clude many of the best-known ma­nu­fac­tu­r­ers of loud­spea­k­ers. Af­ter a co­ro­na-re­la­ted de­cli­ne in tur­no­ver and ear­nings of ‑43.2% and ‑77.7% re­spec­tively in 2020, the com­pa­ny has re­tur­ned to its suc­cessful growth path. Bet­ween 2017 and 2022, the sa­les CAGR amounts to 12.6%, which is an ex­tra­or­di­na­ri­ly good va­lue in view of the fact that this is pu­rely or­ga­nic in na­tu­re.

In the past 2022 fi­nan­cial year, the B&C Spea­k­ers Group achie­ved re­cord re­ve­nues of € 82.1 mil­li­on (pre­vious year: € 45.23 mil­li­on), al­most doubling the pre­vious year’s re­ve­nues due to catch-up ef­fects and pri­ce in­crea­ses. EBIT de­ve­lo­ped dis­pro­por­tio­na­te­ly to € 18.14 mil­li­on (pre­vious year: € 6.55 mil­li­on) and the com­pa­ny suc­cee­ded in si­gni­fi­cant­ly im­pro­ving its EBIT mar­gin to 22.1% (pre­vious year: 14.5%).

This trend was also con­tin­ued in the first half of 2023, in which a fur­ther in­crease in tur­no­ver to € 48.54 mil­li­on (pre­vious year: € 37.39 mil­li­on) was ge­ne­ra­ted. This in­crease is due in par­ti­cu­lar to si­gni­fi­cant vo­lu­me growth and an im­pro­ved sa­les mix. EBIT for the first half of 2023 also in­creased si­gni­fi­cant­ly to € 11.02 mil­li­on (pre­vious year: € 7.24 mil­li­on). The EBIT mar­gin in­creased fur­ther to 22.7% (pre­vious year: 19.4%). This mar­gin in­crease is pri­ma­ri­ly due to the re­duc­tion of ma­te­ri­al cos­ts.

The ba­sis for fur­ther cor­po­ra­te growth was fur­ther in­creased with the ac­qui­si­ti­on of Emi­nence Spea­k­ers LLC as an­noun­ced in Sep­tem­ber 2023. Emi­nence Spea­k­ers LLC is also ba­sed in the field of elec­t­ro-acou­stic trans­du­cers and gi­ves the B&C Spea­k­ers Group bet­ter ac­cess to the Ame­ri­can mar­ket. Thus, the de­scri­bed tran­sac­tion re­pres­ents a fur­ther step for­ward in the group’s in­ter­na­tio­na­li­sa­ti­on stra­tegy. Emi­nence Spea­k­ers was ac­qui­red for a purcha­se pri­ce of around 4.5 mil­li­on US dol­lars and is ex­pec­ted to con­tri­bu­te re­ve­nues of over 18 mil­li­on eu­ros and an EBITDA in the high sin­gle-di­git or low dou­ble di­git mar­gin ran­ge from the co­ming fi­nan­cial year.

The ge­ne­ral in­dus­try en­vi­ron­ment for pro­fes­sio­nal au­dio equip­ment has ex­pe­ri­en­ced a si­gni­fi­cant up­turn sin­ce the co­ro­na cri­sis and has cle­ar­ly sur­pas­sed the pre-cri­sis le­vel. B&C Spea­k­ers also ex­pects ex­tre­me­ly po­si­ti­ve growth pro­s­pects over the next th­ree ye­ars. The po­si­ti­ve busi­ness out­look is com­ple­men­ted by an at­trac­ti­ve di­vi­dend of € 0.60 per share. At the cur­rent share pri­ce le­vel, this cor­re­sponds to a di­vi­dend yield of 3.75%.

For the cur­rent fi­nan­cial year 2023, we ex­pect a growth in tur­no­ver of 18% to € 96.88 mil­li­on and a slight­ly hig­her pro­fi­ta­bi­li­ty due to the lower cost of ma­te­ri­als. In the co­ming fi­nan­cial ye­ars, the re­ve­nue le­vel should in­crease to well over € 100 mil­li­on, also due to an­or­ga­nic ef­fects. On this ba­sis, we have va­lued the B&C Spea­k­ers Group using our DCF mo­del and de­ter­mi­ned a fair va­lue of € 23.00 per share. Due to the po­si­ti­ve busi­ness out­look, we as­sign a BUY ra­ting and see good fu­ture share pri­ce po­ten­ti­al.