Newag S.A. (NWG.WA) | Investment Case

1. Company Snapshot

1.a. Company Description

Newag S.A. engages in the production and sale of railway locomotives in Poland.The company offers electric and diesel multiple units, diesel and electric locomotives, trams, and passenger cars, as well as rolling stock and control systems.It is also involved in the repair and modernization of rolling stock, electric multiple units, and passenger carriages; leases rolling stock; and property rental and management.

The company was founded in 1876 and is based in Nowy Sacz, Poland.

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1.b. Last Insights on NWG

Newag S.A.'s recent performance is driven by its position as an undiscovered gem in the small-cap sector, offering substantial growth potential. The company's focus on rail industry solutions and services positions it to benefit from increased investment in rail infrastructure. With global markets navigating a landscape of cooling inflation and robust bank earnings, Newag's unique growth potential makes it an attractive opportunity for investors seeking value in lesser-known stocks.

1.c. Company Highlights

Last Price	99.3
Change Percentage	-0.90%
Open	100
Previous Close	100.2
Market Cap ( Millions)	4469
Volume	3787
Year High	102.8
Year Low	37.5
M A 50	91.58
M A 200	76.16

FCF Yield	2.16%
Dividend Yield	2.01%
ROE	22.87%
Debt / Equity	23.66%
Net Debt / EBIDTA	38.36%
Price To Book	4.85
Price Earnings Ratio	21.77
Price To FCF	46.33
Price To sales	2.4
EV / EBITDA	14.56

2. Transcript Summary

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3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.02%)

6. Segments

Repair, Modernization, Rolling Stock and Control System

Expected Growth: 5%

Newag S.A.'s 5% growth driven by increasing demand for Repair services from aging rail infrastructure, Modernization of existing fleets, Rolling Stock upgrades for improved efficiency, and advanced Control Systems for enhanced safety and reliability.

Financial Holding

Expected Growth: 7%

Newag S.A.'s 7% growth in Financial Holding is driven by increasing demand for rail transportation, strategic acquisitions, and cost optimization initiatives. Additionally, the company's focus on modernizing its fleet and expanding its maintenance services has contributed to revenue growth. Furthermore, favorable regulatory changes and a strong balance sheet have enabled the company to invest in growth opportunities.

7. Detailed Products

Electric Multiple Units (EMUs)

Newag S.A. offers a range of Electric Multiple Units (EMUs) designed for suburban and regional transportation. These trains are equipped with modern amenities and advanced technology for a comfortable and safe journey.

Electric Locomotives

Newag S.A. manufactures electric locomotives for freight and passenger transportation. These locomotives are designed for high-performance and reliability, ensuring efficient and safe transportation of goods and people.

Diesel Multiple Units (DMUs)

Newag S.A. offers Diesel Multiple Units (DMUs) for regional and rural transportation. These trains are designed for comfort and reliability, providing an efficient mode of transportation for passengers in areas where electrification is not feasible.

Railway Coaches

Newag S.A. manufactures a range of railway coaches, including passenger coaches, sleeping cars, and dining cars. These coaches are designed for comfort and safety, providing a pleasant travel experience for passengers.

Tram Trains

Newag S.A. offers tram-trains for urban transportation, designed for efficient and environmentally friendly transportation in cities and towns.

Modernization and Refurbishment Services

Newag S.A. provides modernization and refurbishment services for railway vehicles, upgrading existing fleets to improve performance, safety, and comfort.

8. Newag S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Newag S.A. operates in a niche market, and the threat of substitutes is moderate. While there are alternative transportation methods, they are not as convenient or efficient as Newag's rail services.

Bargaining Power Of Customers

Newag S.A. has a diverse customer base, and no single customer has significant bargaining power. The company's strong relationships with its customers also reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Newag S.A. relies on a few key suppliers for its rail equipment and services. While the company has some bargaining power, the suppliers also have some leverage, particularly in the case of specialized equipment.

Threat Of New Entrants

The rail industry has significant barriers to entry, including high capital costs and regulatory hurdles. Newag S.A. has a strong market position, and the threat of new entrants is relatively low.

Intensity Of Rivalry

The rail industry is highly competitive, and Newag S.A. faces intense competition from other rail operators. The company must continually innovate and improve its services to maintain its market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	13.32%
Debt Cost	8.23%
Equity Weight	86.68%
Equity Cost	8.23%
WACC	8.23%
Leverage	15.37%

11. Quality Control: Newag S.A. passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Mikron

A-Score: 6.3/10

Value: 6.9

Growth: 7.2

Quality: 6.9

Yield: 5.0

Momentum: 7.0

Volatility: 5.0

1-Year Total Return ->

JOST Werke

A-Score: 5.6/10

Value: 6.2

Growth: 6.0

Quality: 3.2

Yield: 5.0

Momentum: 7.5

Volatility: 5.7

1-Year Total Return ->

Newag

A-Score: 5.3/10

Value: 3.3

Growth: 4.6

Quality: 6.6

Yield: 3.8

Momentum: 10.0

Volatility: 3.7

1-Year Total Return ->

Bodycote

A-Score: 4.8/10

Value: 4.6

Growth: 2.8

Quality: 4.3

Yield: 5.6

Momentum: 6.5

Volatility: 5.0

1-Year Total Return ->

Gévelot

A-Score: 4.6/10

Value: 7.2

Growth: 2.7

Quality: 4.6

Yield: 3.8

Momentum: 1.5

Volatility: 8.0

1-Year Total Return ->

Rieter

A-Score: 4.2/10

Value: 9.3

Growth: 2.3

Quality: 2.6

Yield: 10.0

Momentum: 0.5

Volatility: 0.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

50.14%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.23%

Newag S.A. - PLNEWAG00012

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on NWG

1.c. Company Highlights

Strong Momentum

Average Quality

Fairly Valued

Average Yield

Medium Volatility

Lower Growth

Better Quality

Higher Yield

Expensive

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.02%)

6. Segments

Repair, Modernization, Rolling Stock and Control System

Expected Growth: 5%

Financial Holding

Expected Growth: 7%

7. Detailed Products

Electric Multiple Units (EMUs)

Electric Locomotives

Diesel Multiple Units (DMUs)

Railway Coaches

Tram Trains

Modernization and Refurbishment Services

8. Newag S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Newag S.A. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

99.3$

Current Price

99.3$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA