Warsaw Stock Exchange – Enter Air – analyst comment - Q4’22 Results
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Last recommendation BDM: ACCUMULATE with target price 24,0 PLN/share (2022/10/26) LINK
BDM Comment: The company's results for Q4'22 exceeded our expectations, which we perceive positively. Over the discussed quarter, the company generated revenues of PLN 431.9m (an increase of ca. 56.6% y/y, which was close to our forecasts). Several factors contributed to such a significant increase in turnover, including an increase in the number of flights performed (by around +12% y/y, among others due to the effect of the receding pandemic), an increase in aviation fuel prices and polish currency depreciation. In the area of air services, the company generated turnover of PLN 412.0 million (+57.5% y/y), and PLN 19.9 million (+40.4% y/y) in on-board sales. In Q4'22, cost of sales increased by 36.3% y/y to PLN 426.4 million, and the main factor influencing the higher level of costs compared to the same period of the previous year is primarily an increase in the cost of materials and energy consumption (+ 66.3% y/y to the level of PLN 181.4m - close to our expectations) and third-party services (+16.2% y/y - to the level of PLN 151.7 million - lower than our forecasts) due to higher number of air operations and higher fuel prices. The gross result on the sale of the company amounted to PLN 5.6 million (vs PLN -37.2m in Q4’21). At the IFRS16 EBITDA level, Enter Air reported a profit of PLN 45.4 million (vs PLN -25,1m mln PLN in Q4’21). The financial balance of the company amounted to PLN -98,0 million (PLN 107,3 million of which were exchange differences from the balance sheet valuation - in line with our forecasts). The result was increased by the profit on the settlement of entities accounted for under the equity method (PLN 0.9 million - applies to Chair Airlines AG - which positively surprised us). In the discussed period, the company generated a net result of PLN 67.9 million (vs PLN - 96,0m in Q4’21). In Q4'22, cash flow from operating activities amounted to PLN -55.3 million (vs. PLN -17.3 million a year ago), investment CF = PLN -7.8 million, and financial CF = PLN -80.1 million. At the end of December 2022, the group had PLN 293.3 million in cash (-PLN 155.6 million q/q).
Q4’22 results [mln PLN]
- In Q4'22, the group generated PLN 431.9 million in revenue, which means an increase of approx. 56.6% y/y.
- In the area of air services, the company generated turnover of PLN 412.0 million (+57.5% y/y), and PLN 19.9 million (+40.4% y/y) in on-board sales.
- In Q4'22, cost of sales increased by 36.3% y/y to PLN 426.4 million, and the main factor influencing the higher level of costs compared to the same period of the previous year is primarily an increase in the cost of materials and energy consumption (+ 66.3% y/y to the level of PLN 181.4m) and third-party services (+16.2% y/y - to the level of PLN 151.7 million) due to higher number of air operations and higher fuel prices.
- The gross result on the sale of the company amounted to PLN 5.6 million (vs PLN -37.2m in Q4’21).
- At the IFRS16 EBITDA level, Enter Air reported a profit of PLN 45.4 million (vs PLN -25,1m mln PLN in Q4’21).
- The company's financial balance amounted to PLN -98,0 million (PLN 107,3 million of which were exchange differences from the balance sheet valuation). The result was increased by the profit on the settlement of entities accounted for under the equity method (PLN 0.9 million - applies to Chair Airlines AG).
- In the discussed period, the company generated a net result of PLN 67.9 million (vs PLN -96,0m in Q4’21).
- In the discussed period, cash flow from operating activities amounted to PLN -55.3 million (vs. PLN -17.3 million a year ago), investment CF = PLN -7.8 million, and financial CF = PLN -80.1 million. At the end of December 2022, the group had PLN 293.3 million in cash (-PLN 155.6 million q/q).
- Throughout 2022, the number of performed aviation operations doubled compared to the previous period.
- During 2022, the average employment in the company was 532 people compared to 462 in 2021.
- The company believes that the worsening economic situation makes some foreign customers seek cheaper services, which may allow it to enter richer markets, which were previously hermetically sealed to the company. Today, the company is already experiencing strong demand from customers in new foreign markets.
- To meet the demand reported by tour operators before the summer season, the delivery of 4 new Boeing 737 MAX 8 aircraft is planned. During the high season, the carrier plans to use 32 aircraft, including 3 additional planes leased on a wet-lease basis.
- The beginning of the current year was marked by a strong demand for holiday flights, and if the situation in the world does not negatively surprise the airline industry, the company expects another good year.
- Conference today (April 28, 2023) at 10:00 - https://tinyurl.com/mv8e9jc4.
Results in previous quarters [mln PLN]
Quarterly sales [mln PLN]
Gross margin and sales [%]
Quarterly EBITDA [mln PLN]*
Sales by divisions [mln PLN]
Analyst:
Krzysztof Tkocz
tel.: (+48) 516 086 705
