Initiation of coverage We initiate coverage of German IASP (insulation, access solutions, surface protection, and passive fire protection) service provider KAEFER Isoliertechnik with a hold recommendation. As a provider of industrial services, KAEFER generally benefits from an asset-light business model and a flexible cost structure, which has helped it to weather previous economic downturns. However, the current pandemic has left its mark on the company, also given its high exposure to the oil and gas industry. In line with other companies, KAEFER has focused on the things it can control, i.e. cost, cash and liquidity management. Its conservative financial policy and hence low leverage before the downturn provided it with the necessary financial flexibility. While near-term prospects still remain challenging in view of the second COVID-19 wave and increasing lockdown restrictions in the company’s main market Europe, business conditions should improve as the vaccines are rolled out and visibility and, in turn, the economy recovers. At current bond prices, with the KAEISO 1/24 trading around its call price at 102.75/103.25, we see limited upside potential in the near term. We also note that the call price steps down in July, increasing the likelihood of a call, in our view.