The company's backlog in Q1'24 was rebuilt with the final acquisition of the Bug perimeter contract and several smaller contracts. This should allow it to wait out the current period of lower contract supply. In the medium term, the company should benefit from the unlocking of EU funds (including exposure to infrastructure for the energy transition) and increased defence spending.
Backlog
The Group's backlog amounted to PLN 329m after Q4'23 (significantly lower q/q and y/y). In Q1'24, however, its value decisively recovered (to ca. PLN 600m) after winning a contract on the Bug River and several smaller orders. Segmental positioning Elektrotim's business is currently based on two segments: Installations (defence, industry and maintenance) and Networks (distribution and traction).
In 2023, the latter area was mainly strong. In 2024, there should be more balance (Bug contract in the Installations segment). 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 and the maintenance of increased expenditures on the military area.
Also, the maintenance and traction divisions are exposed to an influx of EU funds. In addition, the company is signalling interest in larger contracts for PSE, where the contracting authority's announcements for the coming years are very ambitious.
Forecasts, ratios
We assume the company will generate PLN 575m in revenue and PLN 52.5m in net profit in 2024 (our forecasts at the EBIT level are impacted by an accounting gain of PLN 20.5m from the loss of control of Zeus). We take a more conservative approach to 2025 due to the current (temporary) supply of contracts. In 2026-27, we currently estimate ca. 10% revenue growth. Our forecasts imply adj. EV/EBITDA‘24=5.0x, adj. P/E’24=7.7x. 1H‘24 results (excluding Q1'24 Zeus accounting impact) according to our assumptions may be weaker y/y, while we expect y/y improvement in 2H’24 (significant contribution from Bug contract).
