Transitional period We reiterate a BUY rating, but lowered our 12-month price target to PLN 3.7

Transitional period We reiterate a BUY rating, but lowered our 12-month price target to PLN 3.7 (previously PLN 4.1).

■ Atende S.A. recorded consolidated revenues of PLN 62.2mn in Q1'24 (-14% y/y). The consolidated gross profit margin was at the level of 21.8% vs. 24.7% a year earlier. The quarter's profitability was negatively impacted by the completion of the pilot phase of A2CC's (subsidiary) implementation of a billing/CRM system for the PGE group, which translated into an operating result of PLN -1.7mn vs. +4.5mn a year earlier. The company reported that there have been further legal changes affecting the scope of the ongoing project, the impact of which is being analyzed. This is likely to extend the implementation period of the pilot phase and the entire PLN 154.3mn gross contrac

■ The update to our forecasts mainly concerns the development of the group's profitability in the current year and beyond. We conservatively assume that work on the PGE contract will be extended to the end of the year putting a strain on the operating margin, which will fall to 2.8% vs. 3.6% a year earlier. We assume that the following years will see a recovery in profitability due to the higher proportion of in-house services in the group's portfolio and the lack of negative impact of the PGE contract on earnings (3.2% and 4.0% margins in ‘25e and ’26e).

■ Failure to invoice Phase I of the contract on the date we had previously assumed means that the company (in line with the board's recommendation) will not be able to pay a dividend this year.

 

✕