SRH AlsterResearch AG: Initiation of coverage for Beiersdorf AG

Recommendation to BUY with a price target of EUR 107.00

Hamburg (pta028/07.10.2021/12:05 UTC+2)

AlsterResearch today initiated coverage of Beiersdorf AG. Established in 1882, Beiersdorf is involved in the development of skin and body care products and self-adhesive solutions and distributes them through its comprehensive portfolio of leading brands. It caters to the international skin care market with its core brands such as NIVEA, Eucerin, and La Prairie. The group’s portfolio includes certain other brands such as Florena, 8X4, Labello, Hidrofugal, Skin Stories and the tesa (self- adhesive) and Hansaplast (wound care) labels.

Beiersdorf has created a niche for itself in core skin and body care products, primarily through its iconic brand, NIVEA. The company maintains its leading position by investment in research and development of innovative and sustainable skin care solutions that cater to the local and regional needs of consumers.

Fast changing consumer preferences towards sustainable and organically developed products as well as accelerating trends towards online shopping have however led Beiersdorf to rethink its initial strategy of growing purely organically. Consequently, Beiersdorf facilitated its portfolio expansion by inorganic growth initiatives visible in the most recent acquired brands, STOP THE WATER WHILE USING ME! and Coppertone.

With a net cash position of nearly EUR 1.4bn, AlsterResearch believes that Beiersdorf is well equipped to pursue this new strategy of both, organic and inorganic expansion. From an investor’s point of view, this should be regarded as good news, allowing for disproportionate top- and bottom-line growth in an already dynamically growing market space. With no further acquisitions pencilled in, AlsterResearch expects a CAGR growth of 6.1% (20-23E). More importantly, putting the huge cash pile to work could soon resolve the long-lamented capital inefficiency and trigger a re-rating of the stock.  

Admittedly, with an EV/EBIT of 18.5x (eAR 2022E), valuation looks rich at first glance. However, taking into consideration the company’s consistency of cash generation and over the cycle returns well above 10%, value can be detected, both on a stand alone but also comparable basis  vs. peers such as L’Oreal, Estee Lauder or P&G. AlsterResearch therefore initiates coverage with a BUY recommendation and DCF-derived price target of EUR 107.00. For full details, please visit the ResearchHub.

About AlsterResearch: AlsterResearch is an independent equity research house, providing MiFID II-compliant research on more than 50 German stocks. The research is available on the digital research platform ResearchHub or via an EMail subscription free of charge or obligations. AlsterResearch also regularly hosts roadshows, roundtables and conferences with key people in interesting companies, registration is open.

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Contact Person:	Thomas Wissler
Phone:	+49 40 309 293-52
E-Mail:	t.wissler@alsterresearch.com
Website:	www.alsterresearch.com
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