2025-06-04-Jefferies-discoverIE（DSCV）_初步观点_DSCV_-_25财年业绩领先；积极基调_26财年预期共识无变化_7页_108kb

UK Electrical | Equity Research | discoverIE | June 4, 2025

First View: DSCV - FY25 Results Ahead

• RATING: HOLD
• TICKER: DSCV LN
• PRICING: Current Price: 633.00p; Target Price: 710.00p (+12%)

Conclusion:

DiscoverIE PLC (DSCV) FY25 preliminary results exceeded consensus expectations across the board. The outlook commentary is positive, highlighting improved sales growth (-4% YOY in OCC terms) compared to the first half of the year (-10%), significantly improved EBITA margins (+120bps YoY to 14.3%), and strong organic order growth (+15% in 4Q). Despite positive momentum, the book-to-bill ratio remains weak, and analysts question the need for Organic Capital Combinations (OCC) and M&A growth to significantly drive valuation higher. The rating is maintained at Hold, with a slight potential increase in the FY26 forecast and an expected positive market response to the results and management's commentary.

Key Highlights:

1. Year-on-Year Improvement: Compared to 1H25, sales growth improved. Margins saw a significant improvement, hitting an EBITA margin of 14.3%, up 120bps YoY. Normalised earnings also improved (+4% YoY PBT/EPS).
2. Divisional Performance:
   • Magnetics & Control: Weak sales (-11% OCC) due to destocking in the industry, but orders were stable (-4%).
   • Sensing & Connectivity: Improved sales (+1% growth) driven by strong demand in data security and increased applications; orders saw modest growth (+12%).
3. Positive Impulse: Strong 4Q order growth (+15%) for both divisions is noted. The order book suggests a normal seasonal weighting.
4. Financial Health: Free cash conversion efficiency (106%) exceeded the 85% target. Net Debt:EBITDA stands at 1.3x, meeting management targets.
5. Management's Strategy: Doubled the long-term EBITA margin target to 17% for FY29/30F, reflecting manufacturing efficiencies and potential M&A synergies.
6. Cautious Outlook: While the outlook is positive in tone and results beat consensus, 2025 lacks the necessary drivers (OCC/M&A) according to analysts for substantial valuation upside.

Analyst Certification:

All analysts certify personal views accurately reflect their views on the company and that no compensation is linked to specific report recommendations or views. Note on FINRA registration for non-US based analysts.

Rating:

Hold: Expected total return of +15% to -10% over 12 months (or ±20% for price < $10).

Disclaimer:

The report includes significant disclosures regarding Jefferies investment banking relationships, conflicts of interest, regulations applicable to various markets and analysts, stop loss targets for Franchise Picks, etc.

Key Message: DiscoverIE's FY25 results were slightly ahead of expectations. While operational improvements are noted, the outlook for meaningful growth in areas like OCC and M&A is uncertain, keeping the Hold rating.