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KION in focus: into the new year with a new boss

The logistics group KION has a new boss after 14 years.

Rob Smith has succeeded Gordon Riske since the beginning of the year. And other things are also changing at the MDAX group. What’s going on at KION, what the analysts are saying and how the shares are doing.

WHAT’S UP AT KION:

With the change in the top management, a new era has dawned at KION. Not only because the new boss Rob Smith apparently prefers coffee to tea compared to his predecessor Gordon Riske, if you believe the animated film on the KION website. Rather, Smith should lead the former forklift manufacturer into the future by driving the business with automation and digitization of logistics systems.

One of the decisive steps towards this was probably taken at KION in 2016 with the takeover of Dematic, a provider of supply chain optimization and warehouse software. This added a second segment to the existing KION range of industrial trucks. A step that is now also helping the Frankfurt-based company to recover from the Corona crisis. After all, the industrial truck business, such as forklifts, still accounts for almost two thirds of sales. But that was significantly strained during the pandemic.

And so far, the double-digit growth rates with the automated storage systems have only partially offset that. But the signs are still pointing to recovery, because the global supply chain problems led to extensive investments in warehouse and logistics space around the world. In the first nine months of 2021, incoming orders at KION exceeded the average expectations of analysts at EUR 9 billion. The bottom line was that the group earned almost 431 million euros after just under 133 million a year earlier.

The growth course will be “continued seamlessly”, said the chairman of the supervisory board, Michael Macht, at the announcement of the change of boss. Riske took over the chief position in 2007, shortly after what was then Linde AG spun off its forklift business with the brands Linde, Still and OM under the umbrella of the new KION Group. Under Riske, an important anchor investor was found in the Chinese company Weichai Power in 2012, and KION went public a year later.

But Smith’s bigger task will be to continue not just Riske’s work. But above all, to put your own stamp on the group. Whether and how the American naturalized in Germany will succeed remains to be seen. In his last position as head of the listed Finnish company Konecranes, he was only barely two years.

WHAT DOES THE SHARE DO:

KION’s recovery course can also be seen in the development of the share. Since the slump due to the corona pandemic in spring 2020, it has climbed sharply, having almost tripled in value, starting from a low of just under 33 euros.

Last summer the rally stalled a bit. The price stagnated around 90 euros from the beginning of June to the beginning of September. At the beginning of October it slumped to less than 80 euros. But the figures for the third quarter in mid-October gave the MDax value another strong boost, which peaked at a high of 103.70 euros in mid-November.

This means that the KION share did not do quite as well as its competitor Jungheinrich. The stock has quadrupled since the pandemic began. In the past year, however, the price trend at Jungheinrich flattened significantly, increasing only around 18 percent. That is more than the MDAX plus of 14 percent, but KION shares rose by a good third in 2021.

In addition, with a market capitalization of currently 4.3 billion euros, Jungheinrich is worth significantly less. KION tips the scales at around 12 billion euros. According to the KION website, Weichai Power is the largest shareholder with 45.2 percent.

WHAT THE ANALYSTS SAY:

The analysts also share the optimism of investors. The average target price of the 16 experts recorded by dpa-AFX since the figures for the third quarter is almost 109 euros and thus 17 percent above the current rate. Most of them recommend buying KION shares: only four have a neutral stance, one advises selling the share, all the others have expressed themselves positively.

It’s time for Debashis Chand of French bank Société Générale to take a fresh look at the stock. The company is attractively positioned in the warehouse automation market and the shares are also attractively valued, the analyst emphasized. At the current price level, the growth potential of the “Supply Chain Solutions” (SCS) division around supply chain solutions is also not sufficiently priced in.

And Jorge Gonzalez Sadornil from the private bank Hauck & Aufhäuser even chose KION as the best industry title. The leading position in automation enables the company to have good growth prospects in the medium to long term. KION benefits from megatrends such as online retail and demographic changes.

In the short term, however, there are also critical voices: Akash Gupta of the US bank JPMorgan referred to recently more pessimistic statements by management about the shortage of components. The previous head of the company, Riske, had expected higher material costs due to the increased raw material prices in the past few months. The lack of material brings with it “great challenges”.

Nevertheless, the KION management is sticking to the forecast that was raised in July. Accordingly, sales should be between 9.7 and 10.3 billion euros. Adjusted operating profit is expected to reach 810 to 890 million euros. JPMorgan analyst Gupta, on the other hand, cut his margin and earnings estimates for the years 2021 and 2022.

His colleague Hans-Joachim Heimbürger from the investment bank Kepler Cheuvreux tried to put it into perspective: Despite all the challenges, he was confident about the year 2022 for the forklift manufacturer. Among other things, he referred to the solid pricing power in the face of high inflation.

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FRANKFURT (dpa-AFX)

Reference-www.finanzen.at

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