Renergetica S p A : Integrae SIM - Equity Research

Production Date: October 7th 2022, h. 6:30 pmPublication Date: October 10th 2022, h. 7:00 am

Renergetica		Italy		Euronext Growth Milan	Renewables
Rating: BUY (unch.)	Target Price € 9,00 (unch.)	Update	Risk: Medium
Stock performance	1M	3M	6M	1Y	Stocks performance vs FTSE Italia Growth
absolute	10,78%	-1,33%	7,25%	53,21%
to FTSE Italia Growth	13,32%	0,89%	21,26%	70,88%
to Euronext STAR Milan	15,07%	9,39%	28,32%	82,61%
to FTSE All-Share	13,80%	2,35%	21,58%	73,44%
to EUROSTOXX	14,39%	1,91%	18,47%	70,85%
to MSCI World Index	18,29%	5,75%	27,03%	73,85%

Stock Data

Price

Target price

Upside/(Downside) potential

Bloomberg Code

Market Cap (€m)

EV (€m)

Free Float

Share Outstanding

52-week high

52-week low

Average daily volumes (3m)

€ 7,40

€ 9,00

22%

REN IM EQUITY

59,84

64,31

18,05%

8.086.098

€ 8,30

€ 4,78

3.000

1H22A Results

The Group, in the consolidated half-year financial report as of 30 June 2022, reported that it had generated a value of production of € 6.42 million, recording an increase of 20.7% compared to the value of € 5.32 million for 1H21A. EBITDA increased from € 2.13 million in 1H21A to € 3.60 million in 1H22A, registering an increase of 69.3% due to the growth in revenues and the reduction in costs incurred by the Group's foreign companies. EBIT, after amortization and depreciation of € 0.60 million, amounted to € 3.00 million, up compared to the value of € 1.67 million in the first half of the previous fiscal year, corresponding to an EBIT margin of 46.7% against 31.3% in 1H21A.

Key Financials (€m )	FY21A	FY22E	FY23E	FY24E
VoP	11,9	13,0	16,5	18,0
EBITDA	5,6	6,3	6,7	7,4
EBIT	4,6	5,5	6,0	6,8
Net Profit	2,6	4,6	4,9	5,5
EPS (€)	0,33	0,57	0,61	0,68
EBITDA margin	47,1%	48,5%	40,6%	40,8%
EBIT margin	38,6%	42,3%	36,4%	37,5%
Net Profit margin	22,2%	35,4%	29,7%	30,6%

Estimates Update

In light of the results published in the half-yearly report for 1H22A, we

modify our previous estimates both for the current year and for the coming

years. In particular, we estimate the FY22E value of production equal to

• 13.00 million and EBITDA of € 6.30 million, corresponding to a marginality of 48.5%. For subsequent years, we expect the value of production to increase up to € 18.00 million (CAGR FY21A-24E: 14.87%) in FY24E, with EBITDA of € 7.40 million (EBITDA margin of 40.8%), up from
• 5.59 million in FY21A (EBITDA margin of 47.1%).

Main Ratios	FY21A	FY22E	FY23E	FY24E
EV/EBITDA (x)	11,5	10,2	9,6	8,7
EV/EBIT (x)	14,0	11,7	10,7	9,5
P/E (x)	22,7	13,0	12,2	10,9
Mattia Petracca	[e-mail]
Giuseppe Riviello	[e-mail]

Valuation Update

We have conducted the valuation of Renergetica equity value based on the

DCF methodology and market multiples of a comparable companies

sample. The DCF method (which in the calculation of the WACC includes for

prudential purposes a specific risk of 2.5%) provides an equity value of

• 73.2 million. The equity value of Renergetica using market multiples is equal to € 72.2 million (with a 25% discount). The result is an average equity value of € 72.7 million. The target price is € 9.00 (prev. € 9.00), BUY rating and MEDIUM risk.

1. Economics & Financials

Table 1 - Economics & Financials

CONSOLIDATED INCOME STATEMENT (€/mln)	FY20A	FY21A	FY22E	FY23E	FY24E
VoP	11,50	11,88	13,00	16,50	18,00
COGS	0,01	0,02	0,05	0,05	0,05
Services	4,86	4,18	3,95	6,55	7,15
Use of asset owned by others	0,26	0,26	0,30	0,35	0,40
Employees	1,32	1,53	2,00	2,35	2,50
Other Operating Expenses	0,37	0,30	0,40	0,50	0,55
EBITDA	4,69	5,59	6,30	6,70	7,35
EBITDA Margin	40,8%	47,1%	48,5%	40,6%	40,8%
D&A	1,08	1,01	0,80	0,70	0,60
EBIT	3,60	4,59	5,50	6,00	6,75
EBIT Margin	31,3%	38,6%	42,3%	36,4%	37,5%
Financial Management	(0,96)	(1,04)	(0,50)	(0,60)	(0,50)
EBT	2,64	3,54	5,00	5,40	6,25
Taxes	0,24	0,90	0,40	0,50	0,75
Net Income	2,40	2,64	4,60	4,90	5,50
Minorities Net Income	0,22	(0,02)	(0,04)	(0,04)	(0,05)
CONSOLIDATED BALANCE SHEET (€/mln)	FY20A	FY21A	FY22E	FY23E	FY24E
Fixed Asset	4,48	3,84	3,45	2,90	2,45
Account receivable	1,27	1,50	2,00	2,25	2,50
Work in Progress	15,85	14,41	19,00	19,30	19,80
Account payable	1,37	2,24	1,15	1,20	1,35
Operating Working Capital	15,75	13,67	19,85	20,35	20,95
Other Receivable	2,22	3,52	2,50	2,60	2,70
Other Payable	2,50	3,82	3,50	2,65	2,75
Net Working Capital	15,46	13,37	18,85	20,30	20,90
Severance Indemnities & Provision	0,57	0,33	0,85	0,90	1,00
NET INVESTED CAPITAL	19,36	16,88	21,45	22,30	22,35
Share Capital	1,11	1,11	1,11	1,11	1,11
Reserves and Retained Profits	6,10	8,75	11,42	16,06	21,00
Group Net Income	2,18	2,66	4,64	4,94	5,55
Equity	9,38	12,52	17,16	22,11	27,66
Minorities Equity	0,36	(0,11)	(0,16)	(0,20)	(0,25)
Cash and Cash Equivalent	5,54	10,13	8,56	10,61	14,06
Financial Debt	15,16	14,61	13,00	11,00	9,00
Net Financial Position	9,62	4,47	4,44	0,39	(5,06)
TOTAL SOURCES	19,36	16,88	21,45	22,30	22,35
	(0,00)	0,00	0,00
CONSOLIDATED CASH FLOW (€/mln)	FY20A	FY21A	FY22E	FY23E	FY24E
EBIT	3,60	4,59	5,50	6,00	6,75
Taxes	0,24	0,90	0,40	0,50	0,75
NOPAT	3,36	3,68	5,10	5,50	6,00
D&A	1,08	1,01	0,80	0,70	0,60
Change in receivable	0,38	(0,23)	(0,50)	(0,25)	(0,25)
Change in Contract Work in Progress	(8,04)	1,45	(4,59)	(0,30)	(0,50)
Change in payable	0,74	0,86	(1,09)	0,05	0,15
Change in OWC	(6,92)	2,08	(6,18)	(0,50)	(0,60)
Other Changes	0,49	0,01	0,71	(0,95)	0,00
Change in Provision	(0,37)	(0,24)	0,52	0,05	0,10
OPERATING CASH FLOW	(2,35)	6,54	0,94	4,80	6,10
Capex	(0,2)	(0,4)	(0,4)	(0,2)	(0,2)
FREE CASH FLOW	(2,51)	6,16	0,53	4,65	5,95
Financial Management	(0,96)	(1,04)	(0,50)	(0,60)	(0,50)
Change in Financial Debt	6,75	(0,56)	(1,61)	(2,00)	(2,00)
Change in Equity	0,04	0,00	0,00	0,00	0,00
FREE CASH FLOW TO EQUITY (FCFE)	3,31	4,56	(1,57)	2,05	3,45

Source: Renergetica and Integrae SIM estimates

UPDATE

2

1.1 1H22A Results

Table 2 - 1H22A vs 1H21A Results
(€/mln)	VoP	EBITDA	EBITDA %	EBIT	Net Income	NFP
1H22A	6,42	3,60	56,0%	3,00	2,58	5,12
1H21A	5,32	2,13	39,9%	1,67	1,12	4,47*
Change	20,7%	69,3%	16,1%	80,1%	130,2%	N/A

Source: Integrae SIM *FY21A data

Through a press release, Stefano Giusto, Chairman and CEO of Renergetica, stated: "The positive results produced in the first half of 2022 are showing strong growth compared to the corresponding period of the previous fiscal year, and very close to the values achieved in the entire 2021 fiscal year, confirming the validity of our business model. Project assignments in Italy to leading investors continue regularly and allow us to look to the future with renewed optimism. Added to this is the fact that Renergetica is active in a rapidly expanding sector, such as renewables, which, also due to the crisis in the energy market and in a green transition perspective, is destined to grow at exponential rates never before achieved. Finally, the company continues to be a reference partner of the main national players in the sale of energy, with which it has developed and will develop projects capable of intercepting the needs of the country and citizens by adopting innovative and strategic solutions, such as, for example, agrivoltaics."

The Group, in the consolidated half-year financial report as of 30 June 2022, reported that it had generated a value of production of € 6.42 million, recording an increase of 20.7% compared to the value of € 5.32 million for 1H21A. The increase in the value of production is essentially attributable to the progress of the numerous projects under development and to the general increase in unit sales prices.

Chart 1 - VoP Breakdown by Sectors

0,3%

1,6%

6,9%

Development

Asset Management

Energy Sales

Other Revenues

91,3%

Source: Renergetica

As shown in the graph, growth was mainly driven by development activity, with an incidence of 91.3% on turnover and a growth of 20.8% compared to the first half of last year, followed by energy sales activity with 6.9%. Asset management and other revenues contribute to 1.6% and 0.3% of the value of production.

UPDATE

3

EBITDA increased from € 2.13 million in 1H21A to € 3.60 million in 1H22A, registering an increase of 69.3% due to the growth in revenues and the reduction in costs incurred by the Group's foreign companies. There was also an increase in the marginality of 16.1 percentage points, with the EBITDA margin increasing from 39.9% in 1H21A to 56.0% in 1H22A.

EBIT, after amortization and depreciation of € 0.60 million, amounted to € 3.00 million, up compared to the value of € 1.67 million in the first half of the previous fiscal year, corresponding to an EBIT margin of 46.7% against 31.3% in 1H21A.

Net Income for the first half of 2022 amounted to € 2.58 million, showing considerable growth (+130.2%) compared to the value of € 1.12 million in the same period of the previous year. This result, which includes a loss of € 0.07 million relating to third parties, is attributable to the marginality produced by the Group in the national context thanks to the numerous projects under development.

UPDATE

4

1.2 FY22E - FY24E Estimates

Table 3 - Estimates Updates FY22E - FY24E

€/mln	FY22E	FY23E	FY24E
VoP
New	13,0	16,5	18,0
Old	14,0	16,5	18,0
Change	-7,1%	0,0%	0,0%
EBITDA
New	6,3	6,7	7,4
Old	5,7	6,7	7,4
Change	11,5%	0,0%	0,0%
EBITDA %
New	48,5%	40,6%	40,8%
Old	40,4%	40,6%	40,8%
Change	8,1%	0,0%	0,0%
EBIT
New	5,5	6,0	6,8
Old	5,2	6,3	7,0
Change	6,8%	-4,8%	-3,6%
Net Income
New	4,6	4,9	5,5
Old	3,9	5,0	5,7
Change	17,9%	-2,0%	-3,1%
NFP
New	4,4	0,4	(5,1)
Old	4,1	(0,8)	(6,3)
Change	N/A	N/A	N/A

Source: Integrae SIM

In light of the results published in the half-yearly report for 1H22A, we modify our previous estimates both for the current year and for the coming years.

In particular, we estimate the FY22E value of production equal to € 13.00 million and EBITDA of € 6.30 million, corresponding to a marginality of 48.5%. For subsequent years, we expect the value of production to increase up to € 18.00 million (CAGR FY21A-24E: 14.9%) in FY24E, with EBITDA of € 7.40 million (corresponding to an EBITDA margin of 40.8%), up from

• 5.59 million in FY21A (corresponding to an EBITDA margin of 47.1%).

UPDATE

5