da Intermonte – Company Research Reports AQUAFIL, GREENTHESIS

Buon pomeriggio,

di seguito e in allegato inviamo i company research report relativi ad AQUAFIL e GREENTHESIS a cura di Intermonte.

Rimaniamo a disposizione per ulteriori informazioni.   

Un caro saluto,                                      
Diana Avendaño Grassini

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AQUAFIL

We Confirm Our Estimates Despite Short-Term Uncertainty

• Mixed 1Q: EBITDA lower than expected, but cash generation better. The company reported a mixed set of results, as EBITDA was below our expectations, also due to some non-recurring items, while cash generation was better than expected in a seasonally unfavourable quarter. In detail:
• Total revenues of Eu169.5mn, down 1.7% YoY (vs Eu177.8mn est.) as volumes decreased by 9.5%, offsetting the higher selling price. Geographically, the trends seen in previous quarters continued, with North America strong (volumes +10%) and APAC holding up reasonably well, while Europe remained rather weak (volumes -20%) across almost all end markets (except automotive). On the bright side, we underline that Econyl’s proportion of revenues continues to increase, reaching 46.9% of fibre revenues (42.2% in 1Q22).
• Adj. EBITDA of Eu21.6mn vs estimate of Eu24.0mn. Margin down from 14.5% to 12.9% due to lower operational leverage and the high unit cost of goods in warehouses. A significant part of the difference between our EBITDA estimate and actual numbers appears to be due to an incident at one of the ACR in the USA, which stopped production at the facility for almost an entire quarter (impact of ~Eu1mn). Excluding this impact, margin dilution would have been more limited (at ~1pp) and aligned to our expectations for the year.
• Net debt as at end-March was Eu247mn, a slight improvement on end-2022 (Eu248mn) and better than our estimate (Eu257mn) thanks to limited absorption from NWC (Eu3mn), a remarkable result bearing in mind that 1Q is generally unfavourable from a cash generation point of view.
• Short-term scenario still clouded in uncertainty. Trends seen in 1Q are substantially continuing in 2Q, which should therefore see a continuation of the weakness in Europe, while North America and APAC should continue to perform better. The scenario for the remainder of 2023 is thus marked by uncertainty: we therefore think that the caution implicit in our estimates for FY23 is justified. As a reminder, we estimate that adj. EBITDA will decline by -6.3% YoY in 2023 with a 12.2% margin, a 1pp drop on 2022. As for net debt, we would expect a Eu30mn decline thanks to a material release of NWC.
• OUTPERFORM reaffirmed; target still Eu8.7. While we believe the uncertain short-term outlook may weigh on the stock performance, we believe the results achieved by the company in uncertain times such as 2022 are confirmation of management’s ability to react quickly to sudden changes in any scenario, as well as its commitment to achieve the sustainability targets presented to the market last year (especially the target for Econyl to reach 60% of fibre turnover). We reaffirm our positive view on the stock, which at our target would trade at 7.8x 2023 EV/EBITDA, with a 9.7% FCF yield.

GREENTHESIS

FY22 Results Confirm Robust Growth Potential

• FY22 results. Greenthesis reported its full-year results on 6 April, which highlighted solid top line growth coupled with strengthening margins. In detail: consolidated revenues came in at Eu171.7mn, up +10% YoY. By business line: sales from Disposal, Recovery and Treatment grew 13% YoY, reaching Eu125.3mn; Environmental Remediation was basically flat YoY, closing at Eu21.9mn; Energy Production was up 80%, closing at Eu15.0mn, while Engineering and Construction was down 93% YoY, closing at Eu0.8mn. At operating level, EBITDA closed at Eu41.3mn, up 60% YoY, adj. EBITDA at Eu39.8mn, up 29% YoY (vs. exp. Eu36.4mn), with the adj. EBITDA margin at 23.4% vs. 19.8% in 2021. Going down to the P&L, net profit closed at Eu18.6mn, up 87% YoY, and adj. net profit at Eu17.5mn, up 25% YoY. Group net income closed at Eu17.3mn, up 79% YoY, and adj. Group net income closed at Eu16.1mn, up 18% YoY. Adj. Group net income margin reached 9.4%, up from 8.7% in 2021. Moving to the balance sheet, net debt closed at Eu75.5mn (vs. Eu69.3mn at YE21, vs. exp. Eu80.1mn). The BoD proposed the distribution of a DPS of Eu0.01885ps (ex-div. date 5 June).
• New 2023-2027 Strategic Plan: strategic guidelines and financial targets. In addition to FY22 results, the company unveiled its new 2023-27 strategic plan. The new plan confirms as its basis the three drivers of dimensional growth, technological innovation, and integration of the various businesses. The plan aims at attainment of the following objectives: i) further revenue growth to reach Eu250mn by the end of the plan, with a higher incidence of revenues from the reuse and recycling of materials; ii) consolidation of average gross operational margin at around 22%-24%; iii) positioning for average net profit margin of 10%; iv) investments foreseen above c.Eu100mn over the plan period; v) confirmation of the increased 2022 dividend pay-out target; vi) strengthening of the ESG rating. Regarding 2023 guidance, the company has set targets for turnover of around Eu200mn and P&L trends capable of confirming the current level of overall profitability in the various business units.
• Updated estimates and valuation. Following better-than-expected FY22 results and solid indications for 2023 and subsequent years, we are revising our forecasts upward. On the top line, we are raising our 2023-24 revenue projections by 4%-17%, while at operating level we are lifting our 2023-24 EBITDA projections by 22%-31%. This reflects higher volume and price assumptions in Waste Recovery and Environmental Remediation as well as higher CapEx/M&A projections, in line with the company’s robust investment plan objectives. As for the valuation, we are increasing our target price from Eu1.35ps to Eu1.50ps, still based on a mix of DCF and market multiples.
• Investment case. BUY from Outperform. FY22 results were above our expectations and confirmed the Group’s robust growth potential. We confirm our positive view on the stock, increasing our recommendation to BUY from Outperform, reflecting the relevant upside on our new updated target price. We continue to believe Greenthesis has a solid competitive positioning in a growing sector and robust value creation potential thanks to its advanced technological know-how in both waste treatment and environmental remediation.