Despite expectations for a weak 1Q24 print next week, we believe this has already been priced-in and we upgrade Sunex from HOLD to BUY. The firm’s 4Q23 results came in below our expectations, as the macroeconomic slowdown on the German and Austrian markets became apparent in 3Q23.
This effect, however, is likely to abate soon, as a new financing scheme for heat pumps was introduced on the Austrian market in January 2024. A total of EUR 2bn has been earmarked for the financing of heat pumps and renewables in 2024, although this could drag into 2025 if not fully utilized in the current year.
Sunex wants to boost its presence on the German and Austrian markets via M&A after its first successful, larger M&A in 1Q23 (i.e. the Bad Krobatk acquisition in Austria). The latter allowed Sunex to establish a presence on the Austrian market.
In 2023, 30% of the firm’s sales already came from Austria versus almost zero in 2022. In Poland, meanwhile, the government plans to introduce heat pump solutions by approved producers: this is likely to tighten the market and tame the expansion of Asian products in Poland. Overall, we expect Sunex to post EBITDA of PLN 22.8m in 2024E (down 31.8% from our previous estimate), PLN 32.9m in 2025E (down 17.5% from our previous estimate) and PLN 41.0m in 2026E (down 8.3% versus our previous forecast).
We expect the upward trajectory to be driven by macroeconomic growth, with a pickup arriving as early as 2H24. We also add PLN 15m in subsidies, which we believe Sunex will ultimately obtain from Polish state bodies for the company’s investment programme. This, as well as growing sales in future years along with lower riskfree rates, has pushed our valuation up slightly, by 3.0% from PLN 12.00 to PLN 12.37 per share. We raise our recommendation from HOLD to BUY.
