da Intermonte – TINEXTA company research report

Buon pomeriggio,

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

Rimaniamo a disposizione per ulteriori informazioni.

Un caro saluto,

Chiara Cattaneo

M: +39 344 2756238

Soft 2Q Hit by ABF Underperformance and Industry 5.0 Delays

2Q results were in line with our expectations, showing a weak quarter mainly due to the Business Innovation division, which was penalised both by delays related to Industry 5.0 incentives affecting the subsidised finance business, and by the poor performance of ABF, which accumulated ~6 months of delays compared to initial projections. As a result, the company lowered its 2024 guidance, cutting adj. EBITDA by about 7%.

• Soft 2Q as expected: as expected 2Q results were rather soft, with turnover closing at Eu104.6mn (Eu104.8mn exp.), up 8.5% YoY thanks to an ever-solid performance of Digital Trust, where the 15.8% rise (of which 10% organic), was enough to offset organic declines at Cybersecurity, down 2.3%, and Business Innovation, up 8.4% but down -9.4% in organic terms. The top line performance was reflected in profitability, with adj. EBITDA coming in at Eu19.1mn (vs. Eu18.9mn exp.), down from Eu23mn last year, largely due to lower margins at Cybersecurity (greater use of external personnel to carry out projects) and Business Innovation (seasonality further exacerbated by ABF’s delays, the aforementioned delays on Industry 5.0 and a less favourable mix). Finally, net debt stood at Eu279mn (vs. Eu271mn exp.), up from Eu240mn as at end-March due mainly to the payment of the dividend (~Eu22mn), and the acquisition of Lenovys (Eu17mn).
• Guidance revised downwards: in light of 1H results and considering ABF’s disappointing performance, the BoD revised its guidance, now expecting group revenues to grow by ~20% (from +21-23% previously) and adj. EBITDA to grow by ~22% (from +28-32% previously). The main reason for this cut relates to the revised outlook for ABF, which is expected to reach previous targets with a delay of 6-9 months. As a matter of fact, ABF is now expected to contribute Eu25-29mn to group revenues (from Eu37mn previously) and Eu10-12mn to group EBITDA (from Eu18mn previously). The leverage ratio (NFP/adj. EBITDA) is confirmed at around ~1.9x at the end of 2024, with the lower adj. EBITDA recovered at net debt level as the company will not pay the two earn-outs envisaged in the ABF deal and the value of call options has been redetermined (total impact ~Eu23mn).
• Estimates: we are revising our estimates to include the reduced contribution expected from ABF, while we are also cutting BI organic growth due to Industry 5.0 delays. This results in a 7.5% average cut in our adj. EBITDA estimates for the next three years.
• BUY unchanged, target from Eu29.0 to Eu24.0. Despite this setback, we believe the company has all the credentials to resume its growth path thanks to structurally-growing reference markets in Digital Trust and Cybersecurity, where Tinexta positions itself as a potential consolidator, taking advantage of its leadership position, while in Business Innovation the accumulated delays should gradually be recovered in the coming quarters. We believe that the company’s focus in the coming months will have to be on consolidating recently-acquired companies (or those about to be acquired in the case of DTH) and extracting synergies, rather than on further acquisitions. Our target price, the average of the outcomes of a DCF and an SOP, is reduced from Eu29.0 to Eu24.0 to reflect the estimate cut made in the report (Eu-3.5) and the lower multiples used in the SOP (Eu-1.5) as a result of the de-rating of peers.