Presentation of the company: R&S Group Holding AG

Hidden Gem?

In this article I present my view on a Swiss UG. (Disclaimer: Hold 191 shares, bought 93 shares today at CHF 10.65).

R&S Group Holding AG ($RSGN) is a Swiss-based company specializing in the manufacture and supply of electrical infrastructure. Its main products include power transformers and oil-immersed and cast-resin-insulated distribution transformers. The company, which operates in Switzerland, Italy, Poland and the Middle East, serves the domestic and various European export markets. R&S was listed on the SIX Swiss Exchange in December 2023 under the ticker symbol RSGN - as DeSPAC.

A brief review

R&S Group Holding AG showed a strong financial performance for the financial year 2023 with sales growth of 40% and a 174% increase in net profit compared to the previous year. Sales forecasts indicate continued growth, with an expected annual increase of 5.3% over the next three years.

The stock is currently trading around 30.4% below its estimated fair value (SimplyWallStreet), indicating undervaluation. In addition, the company is characterized by low volatility compared to the broader market and has a stable business model underpinned by a high EBIT margin of 18.6% in 2023.

My investment case for a buy

R&S Group Holding AG represents an attractive buying opportunity based on several key factors:

Robust growth: the company has shown impressive growth rates in sales and profits and continues to forecast above-average growth compared to the industry.

Stable finances: R&S has a strong cash flow position, which allows the company to invest in strategic initiatives while managing its debt burden.

Dividend potential: Based on the strong results, the Board of Directors is proposing a dividend, which represents additional income potential for shareholders. CHF 0.25 will be paid out for FY 2023 ( ~2.4% yield).

Sustainability and strategic positioning: The company is well positioned to benefit from long-term trends such as decarbonization and energy efficiency.

The board and the previous SPAC include high-caliber individuals who have already helped VAT to achieve success on the stock market.

P/E ratio at ~25, EPS CHF 0.40; current share price of CHF 10.65

Overall, R&S Group offers a compelling investment opportunity for me due to its combination of financial strength, strategic positioning and market potential.

In my opinion, R&S is just waiting to be discovered. They still have to prove themselves this year and then I see disproportionate share price potential. So far, R&S is the first and only company to be listed on the Swiss stock exchange via SPAC. While many US SPACs are performing poorly, R&S has so far been able to hold its own, is not making disproportionate promises and is not reaching for the stars. It seems to be aiming for sustainable growth.

The future (2025+) will show.

Happy investing

GG