Technology

Report by the IDEA!

When presenting FY25 results, TKH Group warned of a weak start to the year, making its 9.6% turnover growth in Q1 notable. The order book declined nearly 10% year-on-year but remained broadly stable versus year-end 2025, mainly due to weaker Tire Building orders within Automated Machinery. This was partly offset by 7.4% organic growth in Vision Technologies, supported by a stronger order book. Electrification and Digitalisation also performed well, benefiting from strong offshore and onshore cable demand. TKH continues progressing with its automation-focused strategy. The Idea maintain a positive long-term investment view based on growth, margins and cash flow generation.

Technology

Report by the IDEA!

At its upcoming CMD, TKH is expected to set new mid-term targets to 2029: turnover >€2bn, EBITA margin >18%, ROCE 22-25% and net debt to EBITDA / leverage ratio <2x. While broadly consistent with prior goals, the updated plan is likely to emphasise organic growth. Crucially, with its investment cycle complete and working capital set to normalise, TKH is forecast to generate €600-650m in FCF in the next couple of years. This underpins scope for materially larger share buybacks - potentially €300m, or ~20% of current m/cap - alongside dividends and bolt-on M&A. the IDEA!’s DCF points to fair value of €51.30/share, implying ~50% upside.

Industrials

Report by the IDEA!

Recovery much faster and stronger than anticipated for this telecom, building and industrial solutions company - the operational leverage, the focus on high-margin products and services and the still to be realised cost savings will enable TKH to achieve an EBITA margin of at least 15% in the medium-term. Share buybacks are also expected to become a regular part of the company’s capital allocation (focus on organic growth will leave much of its FCF unused). Valuation multiples are undemanding and offer ample room for share price appreciation.