da Intermonte – ESPRINET company research report

Buon pomeriggio,

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

Rimaniamo a disposizione per ulteriori informazioni.

Un caro saluto,

Chiara Cattaneo

M: +39 344 2756238

Does Consumer Recovery Mark a Turning Point?

2Q results showed rising revenues after six quarters of decline, with a significant recovery in the consumer segment. PRT outperformed a still-stabilising market, recovering the share lost last year. The company confirmed adj. EBITDA guidance, supported by a gradual recovery in demand (also confirmed by July trend), and rigorous OpEx control. 2Q could be a turning point, with YoY comparisons not particularly challenging in the coming quarters. Our estimates remain unchanged, with our BUY recommendation confirmed and our TP raised to €6.80.

• First signs of demand recovery in 2Q, especially in the consumer segment: revenues came in at €924mn, (+4% YoY), with Italy up +8%, Spain in line YoY (+2%), but improving gradually QoQ (-21% in 1Q), while a continued, marked decline was observed in Portugal, where the contribution remains minimal. By product line, Solutions recorded the highest growth (+10%), while both Screens and Devices showed a trend reversal to grow at a low single-digit rate. By customer type, B2C gross sales were up +19% (with PRT outpacing the market and recovering part of the market share lost in previous quarters), while B2B recorded a +4% increase.
• Rigorous OpEx control and improving cash conversion cycle. Gross profit was €51.7mn (+1%YoY), a 5.59% margin, slightly down YoY as expected (from 5.75%), negatively affected by a worsening mix (higher volumes in a low-margin business). Adj. EBITDA was €10.3mn/ 1.12% (+9% YoY vs. Eu 9.5mn/ 1.07% in 1Q23), benefiting from fairly stable OpEx. Finally, net debt came in at €164mn (down QoQ vs. €188mn at end-March), thanks in part to greater recourse to factoring at €334mn (€290mn in 1Q24 and €364mn in 2Q23), bringing the cash conversion cycle down to 22 days, 2 fewer than in 1Q24, and 9 fewer than in 2Q23. ROCE (based on LTM adj. EBIT and LTM average invested capital) came in at 7.1%, a QoQ improvement (6.4% in 1Q24).
• Better market picture, guidance confirmed: despite the ongoing stabilisation of the reference market, July results confirmed a recovery in retail customer purchases and steady growth in the B2B segment, enabling management to reaffirm FY adj. EBITDA guidance in the €66-71mn range. The market outlook has become clearer, with the domestic market continuing to outperform the Spanish market, where consumer spending in 2Q was stronger than the business segment, pending approval of the new government budget. PRT also expects a rebound in the PC market, driven by the replacement of devices bought during the pandemic and rising demand for AI-enabled devices, which accounted for 14% of demand in 2Q. While this should support ASP growth, the bulk of demand is expected in the coming years.
• Estimates largely unchanged, BUY confirmed, new TP €6.80: we are raising our revenue estimates by 3% on average over the next 3 years, reflecting a faster-than-initially-expected recovery, although with a slightly weaker mix (tilted towards higher volume/lower margin segments), meaning we are leaving our gross profit estimates unchanged. We appreciate PRT’s efforts to control costs and improve cash conversion dynamics, which we expect to continue in 2H. In our view, 2Q could be a turning point, with a more favourable YoY comparison ahead (2H23 revenues and EBITDA were down 17% and 26% respectively), meaning the coming quarters do not look particularly challenging. BUY rating confirmed, TP to €6.80.