Redeye - Hexatronic in an international perspective

Hexatronic delivered a good report. The turnover was almost in line with our estimate but fell a bit short on the margin levels. Overall the company delivered on their financial goals of an EBITDA margin of 10%. The share price has declined after report with almost -14%, this reaction is not justified as the long term prospects are still intact. Comparing to other international fiber companies the multiple valuation is low. Peers trade at EV/EBITDA (TTM) of about 12.6x and Hexatronic at EV/EBITD2014/15E of 8.3x. Our estimated fair value is revised to to a small degree; the value is affected negatively due to slightly lower future estimated margin levels and some growth adjustments but positively by working capital changes. Still we find that the market has overreacted and Hexatronic is still considered good value especially with an international perspective.

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