da Intermonte – UNIDATA company research report

Buon pomeriggio,

di seguito e in allegato inviamo il company research report relativo a UNIDATA a cura di Intermonte.

Rimaniamo a disposizione per ulteriori informazioni.

Un caro saluto,
Lucrezia Pisani

M. +39 347 6732 479

From a Regional Telco to A Diversified Infrastructure Player

Unidata today: a regional FTTH player with big ambitions in adjacent segments. With a track record in the ITC industry going back 37 years, Unidata (UD) is an Italian telecoms operator that mainly provides UBB, Cloud, and IoT services to businesses/public sector administrations /retail consumers in the Rome area. It has a cutting edge FTTH network that covers over 4,900km, connecting 250k households in strategic districts, of which c.80% on proprietary infrastructure and the remaining 20% available indirectly through IRUs with other wholesale providers. Since 2018 UD has invested over Eu54mn to build, develop and strengthen the network, reinforcing its footprint in a high-potential area, i.e. the largest and most complex market for public sector and residential clients, making UD’s infrastructure a non-replicable asset with no risk of infrastructure competition due to high deployment costs for any competitor. In FY21 the company reached Eu37mn of sales (2019-21 CAGR +67%) and Eu14mn in EBITDA (+65% CAGR), a solid margin of c.38%, and 1H22 results continued the very healthy trajectory, reinforcing visibility on business plan targets.

2022-24 estimates: our estimates are broadly in line with current business plan targets, pointing at netrevenues of Eu65.2-79.2mn (our estimate Eu70.8mn) and EBITDA of Eu19.1- 23.3mn (our estimate Eu22.7mn) in 2024, after c.Eu40mn of cumulative 2022-24 CapEx (our estimate Eu45mn). We expect UD to provide more visibility on medium-term targets and the 3 newly-announced initiatives with its next business plan update, while our FY23 NFP does not yet envisage any of the cash-in from the planned rights issue.

Eu50mn rights issue to reshape business profile: the company recently announced 3 co[1]investment initiatives (Unifiber, Unicenter, Unitirreno), which should grant further upside on our estimates. UD will play a key industrial role for the rollout and management of greenfield infrastructure (extension of FTTH network in Lazio region, a Tier IV datacentre in Rome and a submarine cable between Sicily and Genoa, respectively). The smart co[1]investment model will provide greater financial flexibility to UD, with the chance to monetise or gain control of the asset at a later stage. These initiatives involve a Eu25-31mn commitment by UD, financed through a rights issue of up to Eu50mn to be executed by YE23, which will also provide additional firepower for M&A, organic infrastructure development or to increase the scope of current financing projects/JVs. The company also plans to migrate to the STAR segment in 2023.

We initiate coverage with a BUY rating and Eu65 TP based on fully-diluted shares after the warrant exercise. Our DCF valuation leads to a target price of Eu65 per share, which implies >30% upside potential, before including further value creation from the 3 co[1]investment projects. The stock is currently trading at c.10-11x EV/EBIT ’23E (in our view, this is a more meaningful metric to capture D&A associated with different investment profiles), which we believe represents an attractive entry point (Italian peers trading at c.14x). We appreciate Unidata’s business model as it offers a very attractive risk-return profile thanks to: a) a proprietary network with a focus on future-proof FTTH technology (no risk of disruptive change and limited CapEx in the long run) and first-mover advantage in Rome, a highly strategic location; b) strong visibility on IRR (upfront CapEx with guaranteed returns); c) presence of a key anchor client, the state-owned company OF, targeting faster and deeper FTTH coverage of Italy; d) downside protection (visible and recurring revenue streams, low churn); e) supportive regulatory framework (NRRP boost).