Einhell plans stock split to enlarge shareholder base
To make it easier for general investors to buy Einhell shares and expand their existing holdings, Einhell Germany AG is planning to split its stock in a ratio of 1:3. The Executive Board has submitted the relevant proposal to the Supervisory Board for inclusion in the agenda for the upcoming annual general meeting. Part of a focused capital market strategy, the measure is to be adopted at the annual general meeting held June 28th, 2024 and implemented before the end of the year.
Broader-based capital market strategy
“We want to make the preference stock more accessible to a broader base of shareholders alongside institutional investors. Our long-term goal is to deliver a rise in the share price and hence our market capitalization, as the split will make the stock more appealing to investors,” says Jan Teichert, CFO of Einhell Germany AG. “An ‘apparent’ or ‘perceived’ higher euro price per share is something of a barrier to entry for many investors. That is why the shares are to be split, as this will lower the price and make it easier to buy the stock. For existing shareholders, the number of shares they hold will be increased, so there will be no change in terms of the value of their portfolio. Stock splitting generally tends to enhance the visibility and attractiveness of the share, and that is also what we expect to see for the Einhell stock.”
The proposed stock split is one of several measures in the company’s capital market strategy. In the preceding years, for instance, research studies had been commissioned from Warburg Research and Hauck-Aufhäuser/Nuways with the aim of providing shareholders with a broad range of financial analyses about the company. The analysts express optimism, giving a clear buy recommendation based on the Group’s strong cash flow and its long-term strategies, among other reasons.
Mark Schüssler, for example, an analyst at NuWays AG, an affiliate of Hauck Aufhäuser Lampe Privatbank AG, still sees plenty of potential in the Einhell share, with the operating cash flow alone coming to 211.7 million euros in 2023. In a research paper issued April 2024, the NuWays analyst recommends buying Einhell stock at a possible price of 227 euros.
For Warburg analyst Thilo Kleibauer, too, the “highly promising medium-term growth potential” of the Einhell share is not reflected in the current share valuation, which has fairly low multiples based on the planned earnings for 2024/25. He recently confirmed his buy recommendation with a DCF price target of 241 euros. The discounted cash flow (DCF) method is a standard procedure used internationally to calculate the value of a company.
Consistently high dividend payouts
Shareholders of Einhell Germany AG and the general public will be informed of the stock split through corporate press releases and communication at capital market conferences. “We expect the capital market to welcome this step. The company’s dividend policy will not be affected by the stock split. We intend to continue distributing 20-30 percent of the Group’s annual net income to shareholders in the form of a dividend,” says Teichert. Einhell Germany AG had constantly raised the distributed dividend in recent years, before keeping it steady after a challenging fiscal year 2023: At the annual general meeting on June 28th, 2024, the Executive Board and Supervisory Board of Einhell Germany AG will propose keeping the dividend per share the same as the previous year. This means that a dividend of 2.90 euros per preference share and 2.84 euros per common share will be distributed once again. The current plan will thus result in 10.82 million euros in total being distributed to holders of common and preference stock.
No charges for shareholders
Investors who hold shares in Einhell Germany AG would see the number of these shares rise in line with the underlying split ratio. Someone holding ten shares, for instance, would thus have thirty new shares after the 1:3 stock split. Their price would be reduced by the same ratio, but the total value of the thirty new shares would be identical to the value of the ten original shares. There will be no change to the market capitalization initially, as the split only increases the number of shares in the company that can be traded.
Holders of Einhell stock will not incur any charges in relation to the split. The new number of shares will be allocated to their portfolio automatically following the split. Old par value shares will be collected and replaced with new shares – the German securities identification code (WKN) and the International Securities Identification Number (ISIN) will not normally change. Implementation of the measure will not result in costs of any kind for shareholders themselves.
About Einhell Germany AG
Einhell is a leading manufacturer of state-of-the-art tools and devices for the house and garden and will be celebrating its 60th anniversary in 2024. From its headquarters in Landau/Isar (Bavaria), the internationally successful company has continuously expanded its innovative rechargeable battery platform Power X-Change and is now the market leader in the area of cordless tools and garden devices. For many years Einhell has set new standards in terms of endurance, performance, and safety. Einhell customers appreciate the freedom of cordless operation for all their DIY projects, as well as the excellent value for money that Einhell products represent and the first-class customer service offered by the company.