da Intermonte – MONDADORI company research report

Buon pomeriggio,

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

Rimaniamo a disposizione per ulteriori informazioni.

Un caro saluto,

Chiara Cattaneo

M: +39 344 2756238

Mix of Solid Organic Growth & Coming M&A Support our View

• Results sequentially improving, albeit still down YoY. Elica reported a set of results that confirmed a sequential improvement in top line trends in both divisions, as a slight improvement in sales volumes was offset by pricing remaining under pressure on intense promotional activities. Therefore, turnover came at Eu120.1mn, down -4.3% YoY (vs -5.2% expected), but up 2.5% QoQ. By division, Cooking was down 2.1% YoY due to a decline by Own Brands (-9.3%), but a continuation of improvements for OEM, which was up 9.3% in 2Q, partly thanks to a less challenging comparison base, while Motors shrunk by -11.3%, penalised by heating segment demand trends. As a positive surprise Adj. EBIT came at Eu3.3mn, much better than our Eu2.3mn estimate, with a 2.8% margin, down 3.2pp YoY but improving 1.3pp QoQ, as a reduction in costs and raw materials helped to at least partially relieve the impact caused by the ongoing commercial investments and the unfavourable price/mix. Finally, net debt stood at Eu44.9mn (vs Eu44.6mn expected), with just a marginal increase QoQ (was Eu43.1mn as at end-March), thanks to good management of working capital.
• Weak market demand expected to persist in 2H24. Management updated its 2024 outlook now indicating a turnover expected between Eu460mn and Eu465mn (from Eu465mn-Eu470mn) based on a delay in recovery of demand in the industry and a persisting negative price-mix. At the same time, margins are expected to remain under pressure due to the negative price/mix and the significant strategic investments for the cooking transformation plan. For 2H, an improvement of ~0.5pp compared to the 2.8% EBIT Adj. margin registered in 2Q is deemed as reasonable, as things stand, thanks to cost take out management. Finally, the NFP is expected to remain at the level of 2023 as a consequence of shrewd NWC management. Extending the reference horizon to the mid-term, management confirmed its ambition to reach turnover above Eu500mn, an adj. EBIT margin above 6%, and leverage below 0.5x, on condition of a neutral market dynamic.
• Estimates. While for 2024 we are substantially aligning our estimates to management’s indications, for the following years we are taking a more prudent approach on margins evolution and as a result our EBIT adj. is cut by ~11% on average on the 3 years period.
• OUTPERFORM confirmed; target Eu2.15 from Eu2.3.  In the short term, risks persist, mainly linked to the induction hobs market in Europe that is expected to remain very difficult with sector’s players not showing discipline on the pricing side, while the American market appears more disciplined and promising, despite being in an initial development phase for Elica. On the contrary, the group’s positioning in the hood sector is instead so strong that it is not subject to such significant price wars. In this context, the company continues to invest in the repositioning plan in the Cooking business, confident in the opportunity to improve its positioning thanks to a more complete product offering. Albeit it is unlikely that the difficulties will dissipate in the short term, we believe that in the medium-long term there is potential to emerge from the storm as a more solid and complete company. The TP, based on a DCF, goes from Eu2.30 to Eu2.15 to reflect the cut to estimates at operating level, while further downside is limited by a solid cash flow management.