Berenberg Bank confirmed Schoeller-Bleckmann at Hold with target price 80.00 euros. With regards to the current trading environment, Schoeller-Bleckmann’s management at a Berenberg conference commented on the fall in order intake in Q3, which has resulted in a book-to-bill ratio of 0.9x. Moreover, the North American market in particular has experienced some softening in demand, although this is still at high levels compared to historical averages. This softer demand is related to a slowdown in shale gas activity, which has led to declines in its customers’ profitability.
Management also noted that the capex investments of its key clients have to a large extent become depleted in 2012, Berenberg resumes. However, with new capex budgets available as of January, the company expects good order development in Q2 2013. Furthermore, management reiterated its target of a 10% organic revenue CAGR over the long term.
Commenting on its balance sheet structure with a low gearing ratio of 16% at Q3 2012 (versus 14% at year-end 2011) and a medium-term limit at 40-60%, management stated that it has around EUR120m in potential M&A spend in case it finds an appealing target. These potential acquisitions could relate to new exposure in production and completion, as well as technologies in downhole tools. The CFO says the company is currently spending significantly on due diligence processes, Berenberg says