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A solid set of results
FY guidance supportive of expectations, dividend ahead of consensus
Wacker reported full year results yesterday having pre released during early January. Management set its new EBITDA guidance range at EUR1.1-1.4bn. At the mid-point this was c5% below sellside consensus although above buyside expectations, in our view. Wacker also announced a EUR12/share dividend (48% payout ratio, +50% y/y), beating consensus by c5%.
Q1 guide soft and point towards H2 improvement
Management also provided a Q1 EBITDA guide of EUR250-280m. At the midpoint, this was c30% below consensus. Wacker indicated that it was still seeing de-stocking in Chemicals while polysilicon EBITDA will be down sequentially due to lower volumes. Continued weakness in Silicones isn''t too surprising following the company''s profit warning in January. However, management commented on the call that Speciality pricing remains firm; this suggests to us a sharp recovery in margins is possible if volumes rebound during H2. Furthermore, Wacker continues to re-evaluate its pricing model in polysilicon; this could help stem any headwinds from further declines in Chinese spot prices.
The European IRA debate continues
Management retained a firm message that funding is required to improve competitiveness of the European solar chain and enable energy transition. However, management stated that it would not risk sacrificing growth in Chemicals / BioSolutions through deploying capital in to polysilicon without firm customer commitments or a favourable regulatory back drop.
Estimate changes; Retain Outperform
We reduce our FY23/24 EBITDA estimates by c6% on the back of downgrades put through in Silicones. Our price target falls to EUR170/share from EUR175/share as a result. Wacker remains one of our preferred cyclicals; at c6x FY23 EV/EBITDA we see attractive value in the stock both as a recovery play and as through options around energy transition and growth in BioSolutions.