Warsaw Stock Exchange: Relpol - ANALYST COMMENT – Q1’23 RESULTS
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Last recommendation BDM: BUY with target price 8,03 PLN/share (16.05.2023) LINK
Q1’23 results [PLN m]
- The company published its Q1'23 results on Monday before the trading session.
- Q1'23 revenue amounted to PLN 53.3m (+32% y/y). Sales on the Polish market increased by 15% y/y. Export sales increased by 39% y/y (including 52% y/y in Germany, where relays for solar inverters posted very good sales).
- Gross margin improved significantly (23% in Q1'23 vs 18% a year ago and 16% in Q4'22). We note the stabilisation of material costs, the effects of increased automation and high demand in the RES area. The Ukrainian plant is currently operating at full capacity.
- Production profitability was 21% (sales of goods and others have a higher profitability, but their share is negligible in sales).
- EBITDA was PLN 9.0m (vs. PLN 4.7m a year ago), We expected PLN 4.8m. In general, we were cautious in our Q1'23 forecasts; the base was not low. At the same time, in our last analyst report we already pointed to positive trends that should materialise in 2023 results.
- Net income amounted to PLN 5.7m (vs. PLN 2.3m in Q1'22).
- Operating cash flow: PLN -6.9m (vs. PLN -3.9m a year ago). The increase in sales was also followed by an increase in receivables (although the turnover ratio calculated on a quarterly basis is more favourable than a year ago). Inventories and trade payables declined quarter-on-quarter.
- CAPEX: PLN 1.5m.
- Net debt after Q1'23: PLN 20.7m (vs. PLN 13.9m after Q4'22).
- The company indicated that the order backlog, for certain product groups related to the energy transition, has been growing since Q3-Q4'22 and is filled several months ahead, with some customers already placing orders for 2024. Management also points to the stabilisation of raw material and material costs.
BDM Comment: The Q1'23 results are a quarterly record in the company's history (PLN 9.0m EBITDA vs. PLN 4.7m a year ago). The Q1'22 earnings base was not as low as in subsequent quarters, which makes our assessment all the more positive. The company showed strong export growth (Germany: +42% y/y) and gross margin returned >20% for the first time since 2021. We can look critically at this point mainly at working capital (operating cash flow: PLN -6.9m), although the receivables turnover ratio is better than after Q1'22.
Results in previous quarters [PLN m]
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Analyst:
Krzysztof Pado
tel.: (+48) 512 338 250
