# Neodecortech Innovative décor paper printer

- Link: https://www.directorstalkinterviews.com/neodecortech-innovative-decor-paper-printer/412767822
- Published: 2019-02-22T12:21:11+00:00
- Author: Charlotte Edwards

**[⌊Hardman & Co Report Report Downloads⌉⌊Hardman & Co Report Report Downloads⌉[Neodecortech**(
AIM:NDT.MI)  is a vertically integrated business from power generation through to
paper manufacturing, through to printing and impregnating paper. It specialises 
in high-quality printed décor paper and film in natural patterns to sell to the 
interior decoration industry, including furniture and flooring manufacturers. With
all 2017 raw material price increases now pushed through to customers and new investments
in film laminates, we see revenues and margins improving. Neodecortech trades at
a ca.50% EV/EBITDA discount to its nearest peers.

**Strategy**: Neodecortech uses its vertical integration model to ensure continuity
of affordable supply and flexibility in responding to an ever-changing market place.
Margin efficiencies are coming through as plant capacity grows, and new designs 
and products are leveraging the company’s Italian design heritage.

**Trading**: Sharp price rises in pulp and titanium dioxide in 2017 and the first
half of 2018 are now 90% passed on to customers, restoring margins that slipped 
in the second half of 2017. High hopes are resting on the opportunities for the 
new plastic printed laminate film products, which went on sale at the beginning 
of 2019.

**Valuation**: Neodecortech is trading cheaply on forecast multiples. At a ca.50%
EV/EBITDA discount to its nearest quoted peers, the market is more than adequately
discounting for its smaller scale and lack of secondary market liquidity. Our central
DCF valuation comes out at €5.14 per share (see page 21 for more details).

**Risks**: The key risk in the immediate term is the economic outlook for the construction
business generally, but in western Europe in particular. In addition, raw material
price rises and the possibility of more direct competition from Chinese manufacturers
are general concerns in the medium term.

**Investment summary**: Neodecortech specialises in high-quality décor paper and
plastic film, and has strong relationships with its customers. It is looking to 
invest in overseas sales capability, and further improvements in its machines and
new technologies. It is a relatively new listed company, coming to the Italian AIM
market in September 2017, and investors have yet to see a full year’s set of results.
As familiarity grows, we would expect the valuation discount to narrow.

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