Original-Research: Readcrest Capital AG - from NuWays AG
Classification of NuWays AG to Readcrest Capital AG
Deleveraging delivered, bolt-ons fuel the UK; Chg. On Wednesday, Readcrest published its H1 report showing operating performance, which was slightly below our expectations. Here are the key takeaways: H1 sales came in at € 65.3m (eNuW: € 67.5m), up 1.6% yoy and entirely attributable to the UK home care business. In constant currencies, growth should have been in the ballpark of 4.5-5% (eNuW). While weekly care hours remained stable at 88.9k (vs 88.8k prior year), sales were driven mainly by two factors. One is price, as local billing rates increased 4.7% on average on 1st April. The second is M&A: While the two November'25 bolt-ons contributed for the full H1 (eNuW: € 4m top-line effect), Elite Assistance Ltd contributed from 27th March (eNuW: € 0.6m effect). On the other hand, we saw negative impacts from reduced hours due to budget deficits at one local entity as well as the re-tendering of the Manchester contract. GHSC had previously held two of the city's area lots after taking over one from a failed provider, but was limited to a single lot in the new tender and lost an extra-care scheme to a competitor. Group EBITDA came in at € 3.4m (eNuW: € 4.0m), down from € 5.5m in H1'25. The decline is largely due to the consolidation of RCS and its running costs (€ 0.6m) as well as the Readcrest holding expenses (€ 1.2m). On a l-f-l basis and at constant currencies, UK home care EBITDA (€ 5.2m reported, -5.3% yoy) declined by around 15% yoy (eNuW), as M&A contributions of some € 0.7m only partially offset lower organic care hours and the April wage increases. The positive highlight of the release was the deleveraging, thanks to the disposal of the care home portfolio. Proceeds were used to repay £ 30m of bank debt, which together with the reclassification of € 16.4m of the mandatory convertible into equity, cut net debt from € 180.1m at year-end to € 123.5m. FY26 guidance was confirmed, as management continues to expect EBITDA of = € 22m, including c. € 12m from GHSC and c. € 4m running costs from RCS and the holding as well as = € 14m one-offs from creditor waivers. Should the planned AOC receivable purchase close in 2026 as planned, EBITDA would rise to at least € 41.2m. Both one-offs, however, remain conditional on payments that have net yet occured, making the headline figure largely a question of timing. On the operating side, the implied H2 GHSC EBITDA of c. € 6.8m looks achievable given last year's H2 of € 7.0m and the three bolt-ons closed in Q3 (€ 2.5m FY-run-rate, eNuW). Moreover, H2 has, unlike H1, the full effect from the increased billing rates, which is why we regard the outlook for the operating business as achievable. Importantly, the c. € 12m excludes the three bolt-ons closed in Q3 (c. £ 2.4m post-synergy run-rate, eNuW), which only contribute pro rata in FY26 and hence come on top. Management also reiterated its adjusted group EBITDA guidance of € 8-9m. Looking at the German project development business (RCS), Halle switched from a bulk sale to individual sales of the 399 units, with a revised building application due in Q4 and construction start now expected in Q3/27, while Schwerin is set to start in Q1/27. Our take: While individual sales should support pricing and allow buyers' MaBV instalments to fund construction, the switch pushes cash flows back and shifts the risk from a single buyer to absorbing 399 units in Halle at a time of rising rates. However and as outlined in our initiation note, RCS remains the swing factor adding attractive optionality to the case, While there is considerable execution and financing risk, as the creditor waivers underpinning the restructuring have yet to become effective, RCS remains the swing factor adding attractive optionality to the case. Reiterate BUY with an unchanged PT of € 2.80 based on SOTP. You can download the research here: readcrest-capital-ag-2026-10-05-previewreview-en-01aac For additional information visit our website: https://www.nuways-ag.com/research Contact for questions: NuWays AG - Equity Research Web: www.nuways-ag.com Email: research@nuways-ag.com LinkedIn: https://www.linkedin.com/company/nuwaysag Adresse: Mittelweg 16-17, 20148 Hamburg, Germany ++++++++++ Diese Meldung ist keine Anlageberatung oder Aufforderung zum Abschluss bestimmter Börsengeschäfte. Offenlegung möglicher Interessenkonflikte nach § 85 WpHG beim oben analysierten Unternehmen befindet sich in der vollständigen Analyse. ++++++++++ The EQS Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. | ||||||||||||||||||
2409928 05.10.2026 CET/CEST
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