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Original-Research: Ernst Russ AG - from Quirin Privatbank
Kapitalmarktgeschäft
05.06.2025 / 13:34 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group.
The issuer is solely responsible for the content of this research. The
result of this research does not constitute investment advice or an
invitation to conclude certain stock exchange transactions.
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Classification of Quirin Privatbank Kapitalmarktgeschäft to Ernst Russ AG
Company Name: Ernst Russ AG
ISIN: DE000A161077
Reason for the research: Update
Recommendation: Buy
from: 05.06.2025
Target price: 10.00
Last rating change:
Analyst: Klaus Soer
Solid performance in volatile shipping markets - High value of shipping
fleet
Ernst Russ AG reported solid results for Q1/25. The company's revenues
decreased by around 13% yoy. to EUR 40.9m. Mainly caused by the reduced ship
portfolio and higher docking days. The collision in the North Sea involving
ER's vessel Solong, in which ER holds a 55% stake, and the sale of two
vessels have reduced the current fleet to 26 ships. Q1/25 EBIT reached EUR
40.3m. Nevertheless adj. by book gains due to the sale of one vessel EBIT of
EUR 13.2m was achieved. Adj. EBIT margin of 32.3% declined, remains on a
high level and might improve in the further course of the FY. Market charter
rates are holding up quite well in volatile especially shipping markets.
Charter rates are continuously supported by the blocked sea ways in the red
sea which still require additional capacities. ER Charter rates decreased by
USD 1,256 per day to USD 16,883 yoy, thus continuing to normalize. ER fixed
9 new contracts in Q1/25 with an average lifetime of 15.4 months at an
average level of > USD 18.000 above the current fleet level. Thanks to
long-term charter contracts (average duration of 19.8 months as of
31.05.2025) and the high technical availability of the fleet, sales might
reach EUR 157m in total FY 25; EBIT is expected to rise to EUR 91m (+28%
yoy), primarily driven by gains from the ship sales, while operating EBIT is
projected to reach a level of around EUR 58m. Due to investments to reduce
non-strategic minority interest we expect bottom line profits to increase at
a faster pace in upcoming periods and reduce the complexity of the ER group.
Given the ongoing strong balance sheet with an equity ratio of 80.4% (Q1/25)
and a rising net cash position of largely above 100m, ER trades not only on
historical low multiples but also significantly below the level of
international peers. The low valuation is backed by our QPB discounted cash
flow model and an ER market value of the shipping portfolio (EUR 319m; EUR
9.46 per share). Therefore, we reiterate our Buy rating and the TP of EUR
10.00.
You can download the research here: http://www.more-ir.de/d/32808.pdf
For additional information visit our website:
https://research.quirinprivatbank.de/
Contact for questions:
Quirin Privatbank AG
Institutionelles Research
Schillerstraße 20
60313 Frankfurt am Main
research@quirinprivatbank.de
https://research.quirinprivatbank.de/
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2151528 05.06.2025 CET/CEST
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