Last recommendation BDM: BUY with target price 11,0 PLN/share (2022/06/15) LINK
- Revenues in Q2'22 amounted to PLN 76.5m (-2% y/y), above our expectations.
- Gross margin (6.3%) significantly lower y/y and below our assumptions. The company points to rising costs and a deep decline in revenues at constant prices given CPI/PPI. Profitability declines in every segment. The company has been working to revalue contracts, but this has not yielded final results at the end of June. The company significantly reduced the number of smaller contracts in H1'22, due to the mobilisation of resources for the contract for the electronic barrier on the border with Belarus.
- SG&A costs marginally higher y/y.
- Impact of the other operating activities slightly positive in Q2'22 (PLN +1.2m).
- EBITDA in Q2'22 amounted to PLN 0.8m (vs. PLN 5.5m a year ago). A result weaker than our assumptions (we expected PLN 2.0m and did not assume a positive impact from the other operating activities).
- Financial activities slightly positive at PLN +0.3m.
- Q2'22 net profit at PLN 0.7m (weaker y/y, above our assumptions only due to recognition of 'negative' income tax).
- Cash flows from operations activities amounted to PLN +11.8m in Q2'22. We note an increase in prepayments for deliveries to PLN 34.6m (vs. PLN 8.3m after Q1'22).
- At the end of the period, the company had PLN 18m in net cash.
- Backlog: PLN 648m (vs. PLN 598m after Q1'22 and PLN 313m after Q2'21).
BDM Comment: Slightly Negative. The company's Q2'22 results are below our expectations at the EBITDA level, while the net result was supported by a 'negative' income tax. Management points to rising costs and a deep decline in revenue at constant prices given CPI/PPI. The company significantly reduced the number of smaller contracts in 1H'22, due to the mobilisation of resources for the largest contract ever, which is being executed in 2H'22 (electronic barrier on the border with Belarus for PLN 279m). We associate the improved cash position in Q2'22 mainly with the advance payment received for the contract. Due to the scale of the contract, 2H'22 results will be determined by the progress of the work and recognized profitability (in 2H'21 revenues amounted to PLN 147m). The company signed the contract in March 2022, and in August 2022 an annex was signed increasing its value by ca. PLN 9m and extending the completion date to 120 days after the completion of construction works by other parties (previously: 90 days).
The report was prepared by Dom Maklerski BDM at the request of the WSE as part of the Exchange's Analytical Coverage Support Programme
Analyst: Krzysztof Pado krzysztof.pado@bdm.pl tel.: (+48) 512 338 250
