Renergetica S p A : Integrae SIM - Equity Research- 6 aprile ENG

Production date: 05 April 2022 - h 6.30 pm

Published: 06 April 2022 - h 7.00 am

RENERGETICA Rating: BUY (unch.)

Italy

Target Price: € 9,00

Euronext Growth Milan	Ren Energy
(prev. € 7,27)	Update	Risk: Medium

Stock performance

1M

3M

6M

1Y

Stocks performance relative to FTSE Italia Growth

absolute

25,44%

0,57%

40,87%

82,99%

• to FTSE Italia Growth

• to Euronext STAR Milan

• to FTSE All-Share

• to EUROSTOXX

• to MSCI World Index

13,77%

9,09%

44,08%

60,79%

15,72%

15,24%

48,98%

73,44%

12,81%

12,04%

45,19%

82,06%

13,89%

11,37%

44,50%

84,31%

16,16%

4,36%

38,71%

75,86%

Stock Data

Price Target price Upside/(Downside) potential Bloomberg Code

€ 7,10 € 9,00 27%

REN IM EQUITY

Market Cap (€m) 57,41

EV (€m) 61,89

Free Float 18,05%Share Outstanding 52-week high 52-week low

FY21A Results

8.086.098

• € 8,30

  Average daily volumes (3m)

• € 3,81 4.350

The value of production stands at € 11.88 million, a slight increase (+3.3%) compared to the value of € 11.50 million of the FY20A and in line with our expectations (€ 12.00 million). EBITDA amounted to € 5.59 million, compared to € 4.69 million last year (+19.3%). It is also recorded an increase in marginality of 6.3 percentage points, with EBITDA margin increasing from 40.8% in FY20A to 47.1% in FY21A. EBIT amounted to € 4.59 million (€ 3.60 million in FY20A) after amortization and depreciation of € 1.01 million. The total Net Income is equal to € 2.64 million (€ 2.40 million in FY20A). The NFP goes from € 9.62 million to € 4.47 million.

Estimates Update

Key Financials (€m )FY21AFY22EFY23EFY24E

In light of the results published in the annual report for 2021A, we confirm

VoP

EBITDA EBIT

Net Profit

11,9 5,6 4,6 2,6

14,0 5,7 5,2 3,9

• 16,5 18,0

• 6,7 7,4

  our estimates for both the current year and the coming years. In particular, we confirm the FY22E value of production equal to € 14.00 million and

• 6,3 7,0

• 5,0 5,7

EPS (€)

EBITDA margin EBIT margin

Net Profit margin

0,33 47,1% 38,6% 22,2%

0,48 40,4% 36,8% 27,9%

• 0,62 0,70

• 40,6% 40,8%

• 38,2% 38,9%

• 30,3% 31,5%

EBITDA of € 5.70 million, corresponding to an EBITDA margin of 40.4%. For subsequent years, we expect the value of production to increase up to € 18.00 million (CAGR 21A-24E: 14.87%) 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%).

Valuation Update

Main Ratios

FY21AFY22EFY23EFY24E

EV/EBITDA (x)

EV/EBIT (x)

P/E (x)

11,1 13,5 21,8

11,0 12,0 14,7

• 9,2 8,4

• 9,8 8,8

• 11,5 10,1

Mattia Petracca Giuseppe Riviello

[e-mail]equity value of € 72.8 million. The target price is € 9.00 (prev. € 7.27), BUY rating and MEDIUM risk.

We have conducted the valuation of Renergetica's 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 € 72.6 million. The equity value of Renergetica using market multiples is equal to € 73.0 million (with a 25% discount). The result is an average

1. Economics & Financials

Table 1 - Economics & Financials

CONSOLIDATED INCOME STATEMENT (€/mln)	FY20A	FY21A	FY22E	FY23E	FY24E
Value of Production	11,50	11,88	14,00	16,50	18,00
COGS	0,01	0,02	0,05	0,05	0,05
Services	4,86	4,18	5,60	6,55	7,15
Use of asset owned by others	0,26	0,26	0,30	0,35	0,40
Empl oyees	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	5,65	6,70	7,35
EBITDA Margin	40,8%	47,1%	40,4%	40,6%	40,8%
D&A	1,08	1,01	0,50	0,40	0,35
EBIT	3,60	4,59	5,15	6,30	7,00
EBIT Margin	31,3%	38,6%	36,8%	38,2%	38,9%
Financial Management	(0,96)	(1,04)	(0,70)	(0,60)	(0,50)
EBT	2,64	3,54	4,45	5,70	6,50
Taxes	0,24	0,90	0,55	0,70	0,83
Net Income	2,40	2,64	3,90	5,00	5,68
Minorities Net Income	0,22	-0,02	-0,04	-0,05	-0,05
CONSOLIDATED BALANCE SHEET (€/mln)	FY20A	FY21A	FY22E	FY23E	FY24E
Fixed Asset	4,48	3,84	2,45	2,10	1,85
Account receivable	1,27	1,50	2,00	2,25	2,50
Work in Progress	15,85	14,41	18,30	18,60	19,00
Account payable	1,37	2,24	1,15	1,20	1,35
Operating Working Capital	15,75	13,67	19,15	19,65	20,15
Other Receivable	2,22	3,52	2,30	2,35	2,40
Other Payable	2,50	3,82	2,60	2,65	2,70
Net Working Capital	15,46	13,37	18,85	19,35	19,85
Severance Indemnities & Provision	0,57	0,33	0,85	0,90	1,00
NET INVESTED CAPITAL	19,36	16,88	20,45	20,55	20,70
Share Capital	1,11	1,11	1,11	1,11	1,11
Reserves and Retained Profits	6,10	8,75	11,42	15,35	20,40
Group Net Income	2,18	2,66	3,94	5,05	5,73
Equity	9,38	12,52	16,46	21,50	27,23
Minorities Equity	0,36	(0,11)	(0,15)	(0,20)	(0,25)
Cash and Cash Equivalent	5,54	10,13	4,86	7,76	11,28
Financial Debt	15,16	14,61	9,00	7,00	5,00
Net Financial Position	9,62	4,47	4,14	(0,76)	(6,28)
TOTAL SOURCES	19,36	16,88	20,45	20,55	20,70
(0,00)	0,00	0,00
CONSOLIDATED CASH FLOW (€/mln)	FY20A	FY21A	FY22E	FY23E	FY24E
EBIT	3,60	4,59	5,15	6,30	7,00
Taxes	0,24	0,90	0,55	0,70	0,83
NOPAT	3,36	3,68	4,60	5,60	6,18
D&A	1,08	1,01	0,50	0,40	0,35
Change in receivable	0,38	(0,23)	(0,50)	(0,25)	(0,25)
Change in Contract Work in Progress	(8,04)	1,45	(3,89)	(0,30)	(0,40)
Change in payable	0,74	0,86	(1,09)	0,05	0,15
Change in OWC	(6,92)	2,08	(5,48)	(0,50)	(0,50)
Other Changes	0,49	0,01	0,01	(0,00)	0,00
Change in Provision	(0,37)	(0,24)	0,52	0,05	0,10
OPERATING CASH FLOW	(2,35)	6,54	0,14	5,55	6,13
Investments	(0,16)	(0,37)	0,89	(0,05)	(0,10)
FREE CASH FLOW	(2,51)	6,16	1,03	5,50	6,03
Financial Management	(0,96)	(1,04)	(0,70)	(0,60)	(0,50)
Change in Financial Debt	6,75	(0,56)	(5,61)	(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	(5,27)	2,90	3,53
Source: Renergetica and Integrae SIM estimates

1.1 FY21A Results

Table 2 - Actual VS Estimates FY21A - FY21E

(€/mln)	VoP	EBITDA	EBITDA %	EBIT	Net Income	NFP
FY21A	11,88	5,59	47,1%	4,59	2,64	4,47
FY21E	12,00	4,80	40,0%	3,95	2,75	8,76
Change	-1,0%	16,5%	7,1%	16,1%	-4,0%	N/A

Source: Integrae SIM

Through a press release, Stefano Giusto, President and CEO of Renergetica, declares: "The results obtained in 2021 are certainly very positive and growing strongly compared to the past, despite all the difficulties caused by the current contingency. Sales of projects in Italy and the United States also contributed to significantly strengthening the Group's financial position. We are confident that we can continue our growth path with renewed enthusiasm and optimism."

The value of production stands at € 11.88 million, a slight increase (+3.3%) compared to the value of € 11.50 million in the FY20A and in line with our expectations (€ 12.00 million). The value of production, as reported by the Company, mainly consists of revenues from sales net of contract works in progress.

EBITDA amounted to € 5.59 million, compared to € 4.69 million last year (+19.3%). There was also an increase in the marginality of 6.3 percentage points, with the EBITDA margin increasing from 40.8% in FY20A to 47.1% in FY21A. The growing values represent good profitability generated by the Group's business. In particular, the marginality reflects the significant profitability of US projects and the profit of Italian projects given by higher sales prices net of a stable cost structure.

EBIT amounted to € 4.59 million (€ 3.60 million in FY20A) after amortization and depreciation of € 1.01 million. The EBIT margin value varies by 7.3 percentage points compared to the previous year, going from 31.3% to 38.6%.

The total Net Income is equal to € 2.64 million (€ 2.40 million in FY20A). The value as of FY21A reflects higher taxation in the United States.

The NFP goes from € 9.62 million to € 4.47 million through the proceeds of projects authorized in Italy and the United States.

1.2 FY22E - FY24E Estimates

Table 3 - Estimates Updates FY22E-24E

€/mln

New

Old

Change

EBITDA

New

Old

Change

EBITDA %

New

Old

Change

EBIT

FY22E	FY23E	FY24E
14,0	16,5	18,0
14,0	16,5	18,0
0,0%	0,0%	0,0%
5,7	6,7	7,4
5,7	6,7	7,4
0,0%	0,0%	0,0%
40,4%	40,6%	40,8%
40,4%	40,6%	40,8%
0,0%	0,0%	0,0%
New	5,2	6,3	7,0
Old	5,2	6,3	7,0
Change	0,0%	0,0%	0,0%
Net Income
New	3,9	5,0	5,7
Old	3,9	5,0	5,7
Change	0,0%	0,0%	0,0%
NFP
4,1	-0,8	-6,3
4,1	-0,8	-6,4
N/A	N/A	N/A

VoP

New Old Change

Source: Integrae SIM

In light of the results published in the annual report for 2021A, we confirm our estimates for both the current year and the coming years.

In particular, we confirm the FY22E value of production equal to € 14.00 million and EBITDA of € 5.70 million, corresponding to an EBITDA margin of 40.4%. For subsequent years, we expect the value of production to increase up to € 18.00 million (CAGR 21A-24E: 14.87%) 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%).

Chart 1 - Value of Production and EBITDA FY20A-24E

Source: Integrae SIM

Chart 2 - Margin FY20A-24E

Source: Integrae SIM