Analyzing Elektrotim's Business Segments and Updated Forecasts: Insights into Installations, Networks, and Future Projections
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Segmental positioning
Elektrotim's business is currently based on two segments: Installations and Networks. Within the former, the key divisions are defence, industry and maintenance. While within the latter: distribution and traction. In 2023, the strength was mainly in the latter segment. Much higher than presented in 2023, on the other hand, is the potential in the area of Installations (last year the impact of the contract at the Belarusian border is much lower than the year before).
We maintain that in the medium/long term, the company should benefit from an increase in expenditures on the power distribution network, derived from the development of RES (additional support under the KPO/FEnIKS) and the maintenance of increased expenditures on the military area. Also the maintenance and traction divisions are exposed to the inflow of EU funds.
Forecasts, ratios
We assess that management's assumptions from the 2023-25 strategy should be updated, as they do not reflect the company's current position. We assume the company will generate PLN 580m in revenue and PLN 37.0m in net income in 2023 (we note that the final results may be affected by the possible final loss of control of Zeus, which we do not include in the forecast; the subsidiary had a -10m EBIT loss in Q1-Q3'23). We take a more conservative approach to 2024 due to the lower portfolio and the expiry of the positive effect of declining cost pressures. In 2024-25, we currently estimate around PLN 500m revenue and PLN 34 / 27m net profit each. Our forecasts imply EV/EBITDA'24=3.3x, P/E'24=5.2x.
