Thanks to an increasingly lower share of costs of sales and SG&A costs in sales, in the financial year 2022/23 the EBITDA margin increased to 13.9%, and the EBIT margin reached a doubledigit value. In 2023/24 and 2024/25, we assume a decline of EBITDA margin to 11.9% and 10.5%, respectively, and we expect a slight improvement thereafter. In our opinion, Mercor is able to achieve a long-term EBITDA margin of 13.1%.
We assume that the Company will continue paying dividends. The dividend of PLN 1.51 per share will be paid on September 20, 2023, and at the current share price gives a dividend yield of 6.0%. In our forecast, we assume a dividend payout ratio of 50% of previous year’s consolidated net profit.
We assume that in the next two years the level of capital expenditures will be similar to those in 2021/22 and 2022/23, i.e. approximately PLN 12-14mn annually. After that, we assume a gradual increase of CAPEX to its target level of 4.0% of sales revenue.
At the end of 2022/23, the net debt to EBITDA ratio was 0.77x. Taking into account our assumptions, we forecast a gradual decline in net debt despite a fairly high level of dividend payout. We assume that at the end of 2026/27 net debt will be negative (net cash). In our opinion, the Company is in a very good financial condition, which enables it to increase the dividend payout ratio, increase its investment program or carry out acquisitions.
