The engine manufacturer DEUTZ has raised new financial resources through a capital increase to expand its business portfolio. In an accelerated procedure, around 12.6 million new shares were placed excluding subscription rights, generating gross proceeds of approximately 72 million euros, as the company listed on the SDAX announced in Cologne on Wednesday. This increases the share capital by about ten percent. The placement price of 5.71 euros per share was around six percent below the closing price on Tuesday, which was 6.085 euros.
With the proceeds from the current capital increase, DEUTZ aims to strengthen its financial position and maintain flexibility to continue investing in inorganic growth after paying the purchase price for the acquisition of Blue Star Power Systems. This acquisition of the US manufacturer of power generation systems is a central component of DEUTZ's current expansion strategy.
At the end of June, DEUTZ announced the acquisition of Blue Star Power Systems. Based on Blue Star's existing order situation and its own market analyses, DEUTZ expects an additional annual revenue of more than 100 million US dollars, and in the medium term, even more than 150 million US dollars. Additionally, the profit margin before interest, taxes, and depreciation (EBITDA margin) is expected to be higher than DEUTZ's current margin, leading to an operational profit contribution in the low double-digit million-dollar range.
The recent rally in DEUTZ shares was dampened by the announcement of a capital increase on Wednesday. In early XETRA trading, the engine manufacturer's shares fell by up to eight percent and ultimately closed with a loss of 6.16 percent at 5.71 euros. As a result, the shares were the worst performers in the SDAX, which recently posted slight gains.
Investors typically react negatively to capital increases, as the increased number of shares reduces earnings per share. However, if the fresh capital is invested in profitable growth projects, this can lead to profit growth in the long term.
Analyst Klaus Soer from the private bank Quirin considers the valuation of the engine manufacturer to be 'very attractive' despite the price decline due to promising growth prospects in existing and new business areas.
From a technical analysis perspective, the outlook remains positive. Despite the price setback, the shares are still comfortably trading above all key moving averages, which describe the short-, medium-, and long-term trends. These lines were exceeded at the end of June after considerations about potentially entering the booming defense business became known. CEO Sebastian Schulte had made corresponding comments in the "Welt am Sonntag." Since then, the price increase has added up to around 15 percent.
