Mutares: Analysis Of Major Acquisition In Automotive Industry.pdf

## Mutares (Scale All Share, Industrial Goods & Services, MUX GR) - Warburg Research Analysis Summary

Key Takeaways:

Growth and Acquisitions: Mutares, a private equity group specializing in turnaround and restructuring, continues to scale through strategic acquisitions. The largest recent addition is Lapeyre, a company in the automotive industry with projected sales exceeding €360m annually.
Strong Performance: Warburg Research forecasts strong growth for Mutares, projecting consolidated sales above €2.2bn by year-end and targeting €3bn by FY 2023.
Solid Financials: The company has a proven track record of generating profits, with historical EBITDA margins exceeding 5% and a target holding profit above €60m in FY 2023 including exit gains.
Competitive Advantages: Mutares differentiates itself through its network of turnaround specialists, limited competition in the European small-midcap special situations market, and significant stakeholder ownership by management and board members.
Valuation: Warburg Research maintains a "Buy" rating with a target price of €31.00, reflecting a strong outlook for Mutares' future performance.

Recent Developments:

Announced acquisition of Lapeyre (pending)
Continued scaling through smaller acquisitions
Issued bond in 2020 to accelerate growth

Strengths (Warburg Research Analysis):

Experienced management team with a proven track record
Strong network of turnaround specialists across Europe
Focus on small-midcap companies in special situations
Limited competition in the target market
Significant stakeholder ownership by management and board members

Risks:

Economic downturns impacting the performance of portfolio companies
Increased competition in the private equity space
Unforeseen challenges arising from specific turnaround projects

Financial Highlights (2021e):

Market capitalization: €380m
Number of shares: 15m
EV: €561m
Freefloat Market Share: 61.1%
Price/Book Ratio: 1.1x

Guidance:

Annualized group sales above €2.2bn (including signed acquisitions)

Warburg Research Outlook:

Mutares is well-positioned to benefit from the ongoing recovery in Europe and its focus on turnaround and restructuring makes it resilient during economic downturns. The company's strong financial position, experienced management team, and competitive advantages support a positive outlook for future performance.