da Intermonte – INTRED company research report

Buon pomeriggio,

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

Rimaniamo a disposizione per ulteriori informazioni.

Un caro saluto,

Ludovica Bertola

M: +39 347 1667538

Strong Volume Expansion Underpins Revenue Growth in 1H

• 1H24 preliminary sales. Intred reported revenue of over €27.5mn for 1H (our exp. €27.4mn), marking a 12.1% increase. Excluding the contribution of Connecting Italia of c. €1.6mn (our exp. €1.5mn), standalone revenue was €25.9mn, up 5.6% (1Q: +6.4%, 2Q: 5.1%). The growth is attributed to successful expansion into traditionally weaker provinces like Milan, Pavia, Lecco, Mantua, and Sondrio, largely due to the School Tenders initiative, which facilitated the deployment of proprietary fibre. Management also highlights the positive impact of ongoing communication campaigns featuring football legend Andrea Pirlo, which are expected to further boost revenue and market penetration in the coming months.
• Revenue growth across all customer segments: Business segment (56% of total) including Connecting Italia, a 100% business-dedicated asset, confirmed the high- teen trajectory (1Q: +19%, 2Q: +18%) and was the major contributor to growth in 1H. Wholesale segment (8% of total) saw a 12% increase in the first half, with a notable acceleration from 5% growth in 1Q to 19% in 2Q, likely due to different phasing. The Public Administration (19% of total) and Residential (17%) segments showed steady growth, each increasing by mid-single digits in 1H. The company’s core business, recurring services, accounted for over 87% of total revenue, reaching €24.1mn, a 14.1% increase. Fibre optic connections drove a significant revenue rise of 13.3% to €16.8mn.
• Strong execution on School Tenders, solid KPIs. The School Tenders programme led to the activation of >3,900 schools (out of a total of approximately 5,000), generating €4.4mn top line (16% of 1H revenues). Intred’s proprietary fibre network expanded by 10.1%, reaching nearly 13,000km by June 2024, from >11,700km as at the end of 2023. The company maintained an industry-leading low churn rate of 4.6%, reflecting high customer loyalty.
• No change in estimates. 1H sales growth is on track with our FY assumption (+14.9% YoY to €57.5mn, including a €3mn boost from Connecting Italia). Consequently, we are keeping our estimates unchanged.
• BUY confirmed; target still €16.5. The strong first-half results across all customer segments, combined with accelerated value creation through Connecting Italia, bode well for the coming quarters and provide greater visibility on our current estimates. We appreciate INTRED’s business model, as it offers a very attractive risk-return profile thanks to: a) a proprietary network focused on future-proof UBB technology (no risk of disruptive change and limited long-term CapEx needs) and first-mover advantage in Lombardy, a highly strategic location (1/5 of Italy’s GDP) with a strong presence of SMEs; b) footprint expansion from School Tenders and a commercial investment cycle to support long-term growth and a faster take-up rate; c) strong visibility on IRR (upfront CapEx with guaranteed returns) with downside protection (visible and recurring revenue streams, low churn); d) a supportive regulatory framework (NRRP); e) long-term optionality offered by attractive assets (proprietary network, well-established and loyal customer base) in a potential market consolidation scenario.