Buon pomeriggio, di seguito e in allegato inviamo il company research report relativo a LUVE a cura di Intermonte. Rimaniamo a disposizione per ulteriori informazioni. Un caro saluto, Lucrezia Pisani M. +39 347 6732 479
2022 Forecasts Up Double Digit Even Remaining Cautious
* Very strong 1H22 results. 1H revenues, announced 14 July, were Eu318.4mn, +39.9% YoY (+37% LfL). Concentration of revenues by client was low with the leading client at less than 6% of the total and the top 10 amounting to circa 34% of the total. The gross margin was the main positive surprise at 46.6%, down on 1H21 (48.7%) but above estimate (45%). Adj. EBITDA was Eu42.8mn, up 61.5% YoY and 6.5% better than expected. Two elements generated the YoY change in adj. EBITDA (+ Eu16.3mn, or + 61.5%): Eu10.2mn from the contribution of additional volume; and the difference between the Eu56.9mn rise in sale prices and the Eu50.8mn increase in costs. Net profit was Eu32.7mn, 18% better than expected. 1H22 saw one-off costs of Eu0.7mn, the capital gain from disposal of an investment (Eu9.5mn), and a positive non-cash change in the fair value of derivatives (Eu4.1mn): net of these items profit would have been Eu21.6mn vs Eu9.7mn in 1H21. In terms of cash flow, net financial debt as at end-June was Eu155mn, in line with our estimates and up on YE21 due to the strategic decision to keep high inventories of raw materials and electrical components and M&A (Eu12.6mn).
* Current trading and outlook. Management gave indications on revenues from products in July and August (Eu90.7mn, +15.8% YoY) and on the order book as at end[1]August (Eu199.7mn, -0.5% one end-June). While some market segments are slowing, purchasing costs for the main raw materials are also in retreat and LU-VE is confident of confirming more or less the 2H21 level of profitability in 2H22 as well. Despite the short-term uncertainty, the Group remains well positioned for the transition to more efficient and sustainable solutions, which is expected to enjoy high growth.
* Change in estimates. Considering the healthy order book, we see scope to raise our FY22 revenue forecasts by 1.7%, bearing in mind that comparison is tougher in 2H22. Our 2H22 revenue forecast (+2.5% YoY) implies a -3.3% performance in the 4-month period from September to December. As for 2023, we are leaving our revenue forecast unchanged (now foreseen +1.7% YoY vs. +3%). In terms of margins, we are improving our 2022/23 EBITDA margin from 11.5%/12.2% to 12.8%/12.8% to factor in the better than expected gross profit. All in all, we are raising EPS by 18.8% for 2022 and by 6.8%/6.2 for 2023/24 because. We remind that in 2H22 LU-VE will pay an extraordinary bonus to employees of Eu3mn which we are factoring in our estimates as a non-recurring item.
* OUTPERFORM confirmed; target Eu27.2 from Eu25.2. 1H22 results have shown very strong trends. Although we are maintaining quite a cautious short-term view to be consistent with the current macro outlook, in this report we are upgrading our estimates, especially on 2022, and we are still extremely confident on the company’s prospects, as it remains a major beneficiary of huge green investment programmes in the US and EU. Our target, calculated based on a DCF model, goes from Eu25.2 to Eu27.2 factoring in the new forecasts. LU-VE expectsthat within the end of Septemberthe stock should be admitted to the STAR segment of Borsa Italiana.On 27th September the group will host an investor day in Milan to better detail its growth strategy
2022 Forecasts Up Double Digit Even Remaining Cautious
* Very strong 1H22 results. 1H revenues, announced 14 July, were Eu318.4mn, +39.9% YoY (+37% LfL). Concentration of revenues by client was low with the leading client at less than 6% of the total and the top 10 amounting to circa 34% of the total. The gross margin was the main positive surprise at 46.6%, down on 1H21 (48.7%) but above estimate (45%). Adj. EBITDA was Eu42.8mn, up 61.5% YoY and 6.5% better than expected. Two elements generated the YoY change in adj. EBITDA (+ Eu16.3mn, or + 61.5%): Eu10.2mn from the contribution of additional volume; and the difference between the Eu56.9mn rise in sale prices and the Eu50.8mn increase in costs. Net profit was Eu32.7mn, 18% better than expected. 1H22 saw one-off costs of Eu0.7mn, the capital gain from disposal of an investment (Eu9.5mn), and a positive non-cash change in the fair value of derivatives (Eu4.1mn): net of these items profit would have been Eu21.6mn vs Eu9.7mn in 1H21. In terms of cash flow, net financial debt as at end-June was Eu155mn, in line with our estimates and up on YE21 due to the strategic decision to keep high inventories of raw materials and electrical components and M&A (Eu12.6mn).
* Current trading and outlook. Management gave indications on revenues from products in July and August (Eu90.7mn, +15.8% YoY) and on the order book as at end[1]August (Eu199.7mn, -0.5% one end-June). While some market segments are slowing, purchasing costs for the main raw materials are also in retreat and LU-VE is confident of confirming more or less the 2H21 level of profitability in 2H22 as well. Despite the short-term uncertainty, the Group remains well positioned for the transition to more efficient and sustainable solutions, which is expected to enjoy high growth.
* Change in estimates. Considering the healthy order book, we see scope to raise our FY22 revenue forecasts by 1.7%, bearing in mind that comparison is tougher in 2H22. Our 2H22 revenue forecast (+2.5% YoY) implies a -3.3% performance in the 4-month period from September to December. As for 2023, we are leaving our revenue forecast unchanged (now foreseen +1.7% YoY vs. +3%). In terms of margins, we are improving our 2022/23 EBITDA margin from 11.5%/12.2% to 12.8%/12.8% to factor in the better than expected gross profit. All in all, we are raising EPS by 18.8% for 2022 and by 6.8%/6.2 for 2023/24 because. We remind that in 2H22 LU-VE will pay an extraordinary bonus to employees of Eu3mn which we are factoring in our estimates as a non-recurring item.
* OUTPERFORM confirmed; target Eu27.2 from Eu25.2. 1H22 results have shown very strong trends. Although we are maintaining quite a cautious short-term view to be consistent with the current macro outlook, in this report we are upgrading our estimates, especially on 2022, and we are still extremely confident on the company’s prospects, as it remains a major beneficiary of huge green investment programmes in the US and EU. Our target, calculated based on a DCF model, goes from Eu25.2 to Eu27.2 factoring in the new forecasts. LU-VE expectsthat within the end of Septemberthe stock should be admitted to the STAR segment of Borsa Italiana.On 27th September the group will host an investor day in Milan to better detail its growth strategy
Intermonte-LUVE-Company-Research-Report-220912.pdf