The recently ended 2022/23 financial year turned out to be another record period for the Ambra Group. The company once again positively surprised us with its results, especially at the level of operating and net profit, which is a consequence of a higher than expected gross margin on sales (35.5% in the last quarter). However, sales revenues increased slightly below our expectations, totaling PLN 875.8 million (+12.9% y/y) throughout the year.
The observed improvement in results in the fourth quarter (April - June) was possible thanks to the systematic introduction of product price increases, which at the same time translated into an average annual decline in sales volumes by 2.7% y/y. In our opinion, the next quarters will be a more demanding period for the Company, in which Ambra will not be able to maintain the double-digit growth rate of its results. We expect that in the coming months the Company will continue to face cost pressure, as well as weaker consumer sentiment, which will further weaken demand. Taking into account our forecasted net profit for the 2023/24 financial year, the Company is currently trading at an ahead P/E ratio of 11.2. Compared to the latest forecast, we are raising the target price of 1 Ambra share from PLN 33.6 to PLN 35.9, while maintaining our "buy" recommendation.
The change in valuation was positively influenced by an increase in forecasts regarding the Company's future results, a decrease in the risk-free rate, as well as higher ratios of comparable companies. The Management Board of Ambra recommended the General Meeting of Shareholders to pay a dividend of PLN 1.1 per share from the profit earned in the 2022/23 financial year. The proposed amount is therefore both 10% higher y/y and the highest in the Company's history to date. In the coming years, Ambra will benefit from the relatively low level of net debt, i.e. PLN 28.1 million (i.e. 0.2x EBITDA), as well as its liquidity comfort. Therefore, in our opinion, the current dividend policy is not at risk in any way and should be maintained in the coming years.
