Following record revenue, construction recovery would be key for Masterplast
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The government crisis is over – what lies ahead for Romania?
Romania has experienced five turbulent months on the domestic political front. Nevertheless, after several prime ministerial candidates failed to secure parliamentary support, a new government was finally formed in late October. The Romanian equity market, which had performed strongly during the first half of the year, lost momentum towards the end of August and entered a downward correction in September. It then rebounded in October, partly reflecting the reduced risks of a snap election and a sovereign rating downgrade to below investment grade. While domestic political tensions have subsided, the BET index has yet to recover to the vicinity of its August peak. At the same time, Romanian equities no longer appear particularly inexpensive from a valuation perspective.
Commodities - Technical Analysis
Signs of a turnaround have emerged for gold and silver, and a strong upward move could trigger the next upward wave. A breakout above the key downtrend lines could also be on the horizon, which would further reinforce the positive turnaround. The price of oil has broken below the 100-day moving average, weakening the bullish outlook, and with the uptrend broken, it has entered a correction phase. Natural gas is showing a correction following a sharp decline, but has not yet managed to break through its downtrend line. Copper continues to trade within a wide range and is approaching the lower end of that range. Following a significant decline, wheat and corn prices have reached key support levels from which an upward correction—or even a new uptrend—is likely to begin.
We have revised our DCF model and earnings estimates for Masterplast (a Hungarian player in the insulation business with regional presence). We have raised our 12-month target price to HUF 2723 (from HUF 2552 as of 01.07.2025), while we maintain our HOLD recommendation. The primary reason for raising the target price is that the company may be able to curb its capital expenditures more than previously expected, which supports FCFF estimates in the coming years, while we are calculating with a lower leverage beta due to the improving capital structure, which lowers WACC values.
Masterplast closed out 2025 with a strong quarter, achieving record revenue while also reaching EBITDA levels not seen since 2022; it also returned to profitability on a net income basis in Q4, excluding one-time items. However, the rise was primarily driven by strong demand for Certified Energy Savings (HEM), which may still support growth in early 2026, but we see little chance of repeating the Q4 figures. In segments independent of HEM, demand remains subdued, and the construction industry failed to show any meaningful turnaround in 2025. The number of new housing starts reached a decade-long low, though the pace of decline has slowed compared to 2024, while the number of building permits issued showed a significant increase. The Otthon Start program may also support a revival in new housing construction in the medium term, but its impact is likely to materialize only toward the end of the year at the earliest. In contrast, the Home Renovation and Rural Home Renovation Programs are expected to run out in the first half of the year. Overall, the business outlook remains characterized by significant uncertainty .
The macroeconomic outlook is mixed: revenue-weighted GDP growth forecasts for Masterplast’s markets indicate a 2.2% increase in 2026, following 1.2% in 2025. However, this forecast was 2.5% just eight months ago, and growth expectations for subsequent years are also slightly lower. In addition, the potential prolongation of the war in Iran creates further uncertainty and downside risks.
In our view, Masterplast’s liquidity position has improved since the middle of last year. With significantly higher cash reserves and the operating cash flow expected this year, the company may be able to cover its larger loan and bond repayments in 2026, assuming that short-term working capital loans are successfully extended.
Given the slower-than-expected economic recovery, we have revised our revenue forecasts downward over the longer term, although this may be partially offset by the positive impact of HEM sales in 2026. Overall, we still expect a YoY increase of approximately 6% in 2026 revenue, while the EBITDA margin could rise to 9.2%, although this still falls somewhat short of our previous expectations.
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