Original-Research: Ernst Russ AG (von Quirin Privatbank Kapitalmarktgeschäft...

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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

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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 (%

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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