23. January 2020 | 05:50 CET
Berenberg says "buy": Next recommendation for MPH investment M1 Kliniken AG
The analysts at Berenberg have begun coverage of M1 Klinken AG and have recommended the share as a buy. With more than 70 doctors and over 200,000 treatments annually, M1 is the market leader for beauty medicine in Germany. Thanks to its strategy "highest quality at the best price", the company has been able to achieve annual growth rates of around 30% since 2014. The investment of MPH Health Care, which is also listed on the stock exchange, should also grow significantly in the future. The driving forces are the increasing market penetration in Germany and the international rollout. The analysts expect EBIT to grow by 30% annually until 2022 and recommend buying the M1 share with a price target of EUR 18. Analysts from Commerzbank, Kempler or GBC also recommend buying.
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ISIN: DE000A0STSQ8 , DE000A0L1H32
Market leader in the growing German market for beauty treatments
With more than 200,000 treatments per year, M1 is the market leader for beauty treatments in Germany and has an estimated market share of 20 to 25% in non-surgical injectable treatments. Thanks to a combination of high quality treatments and cost leadership based on economies of scale in treatments and purchasing, M1 clinics have started to build a strong brand across Germany and launch their own M1 Select skincare range.
Prospects for economies of scale with limited risk
For further market penetration, M1 is currently expanding in German top 2 cities with 300,000 inhabitants. Thanks to its capital-saving business model and variable salary structures for doctors, the economic conditions are very favourable. This is offset by the economies of scale described above. For example, Berenberg assumes that M1 Kliniken will generate an attractive ROCE of more than 20% by 2021.
Growth through international expansion
M1 Kliniken plans to double the number of treatment units from 24 at the end of 2018 to 50 by the end of 2020, 20 of which will be outside Germany. The target markets are nearby Austria, Switzerland, the Netherlands as well as Great Britain and Australia. The goal of M1: An international market leader. For 2018-22, Berenberg forecasts average revenue growth of 17% p.a. and average EBIT growth of 30% p.a., driven mainly by the core segment Beauty.
Analysts with price targets up to EUR 21
With its buy recommendation, Berenberg joins the ranks of the positive analysts' comments. All the accompanying institutions - including Commerzbank and Bankhaus Metzler - are convinced that M1 Kliniken will also grow at double-digit rates in the coming years and recommend the share as a buy. The price targets range up to EUR 21 per share.