Recent results
In Q1-Q3'23, the Company generated revenue of PLN 901m (+43% y/y) and net profit of PLN 10.1m. The Q3'23 results (PLN 359m revenue and PLN 5.9m net profit) were much higher than we had anticipated, due in part to higher y/y revenue growth and a one-time profit on the sale of fixed assets (nearly PLN 4m). The company's gross sales margin (3.2%) continued to suffer from the effect of a pool of low-margin contracts, among other factors. Contracts from the Romanian market were already contributing more significantly to revenues, which was associated with an increase in working capital commitment.
Portfolio
ZUE's backlog amounted to PLN 2.05bn after Q3'23. We estimate that railway contracts in Poland account for the largest share (about half) of the current backlog, followed by railway contracts on the Romanian market and municipal contracts (tramway). The remainder is made up of maintenance contracts and trading company orders. The portfolio still includes contracts for PKP PLK signed in 2017 (we estimate that the value of work on these contracts may still amount to a small amount).
Segmental positioning
The company has exposure primarily to the rail and tram markets (to a small extent also to local roads through its subsidiary Energopol). Both of these areas are largely financed by EU funds (rail - FEnIKS, KPO, CEF, tram lines - FEnIKS), their unblocking will have a positive impact on the supply of contracts. An entry into the PSE market was also planned in the past. On the other hand, entry into the Romanian market is not ZUE's only approach to foreign markets (a contract in Slovakia has already been executed). In 2023, the first Latvian contract was also secured, previously the company had also had a foothold in the German market or has been observing the Bulgarian direction for many years.
