The report was prepared by Dom Maklerski BDM at the request of the WSE as part of the Exchange's Analytical Coverage Support Programme
Last recommendation BDM: ACCUMULATE with target price 24,0 PLN/share (2022/10/26) LINK
BDM Comment: Q3 2022, despite the unfavorable environment (according to official analyses, the market was about 18% below the 2019 level), turned out to be a record quarter for the company in terms of results. However, they were lower than our expectations, which we perceive slightly negative. Over the quarter, the company generated revenues of PLN 1,006.1 million (an increase of approx. 87.4% y/y, vs. our assumptions of PLN 1,153.4 million), and the number of flights increased y/y (definitely the increase in revenues was primarily related to the subsiding Covid-19 pandemic and the fact that tourists are eager to return to their holidays abroad after the restrictions are lifted). In the area of air services, the company generated turnover of PLN 981.5 million (+90.5% y/y), and PLN 24.6 million (+13.7% y/y) in on-board sales. In Q3'22, cost of sales increased by 120.8% y/y to PLN 842.1 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 (+ 167.8% y/y) and third-party services (+146.1% y/y) due to higher number of air operations and higher fuel prices. The gross result on the sale of the company amounted to PLN 164.0 million (+5.5% y/y). In Q3'22, the company recorded PLN 56.9 million in other operating income, which was related to the remission of the PFR loan. At the IFRS16 EBITDA level, Enter Air reported a profit of PLN 266.6 million (+29.4% y/y). The financial balance of the company amounted to PLN -103.3 million (PLN -91.0 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 5.5 million - applies to Chair Airlines AG - which positively surprised us). In the discussed period, the company generated a net result of PLN 104.0 million (+37.6% y/y). In Q3'22, cash flow from operating activities amounted to PLN 240.8 million (vs. PLN 226 million a year ago), investment CF = PLN -0.3 million, and financial CF = PLN -83.5 million. At the end of September 2022, the group had PLN 448.9 million in cash (+PLN 164.9 million q/q).
• In Q3'22, the group generated PLN 1,006.1 million in revenue, which means an increase of approx. 87.4% y/y. Thus, the company beat the record year of 2019, despite the fact that, according to official analyses, the market was about 18% below the level of 2019. The significant increase in revenues was mainly related to the receding Covid-19 pandemic and the fact that tourists are eager to return to their holidays after the restrictions are lifted abroad.
• In the area of air services, the company achieved PLN 981.5 million in turnover (+90.5% y/y), and PLN 24.6 million in on-board sales sales (+13.7% y/y).
• In the discussed period, the cost of sales increased by 120.8% y/y to PLN 842.1 million, and the main factor contributing to the higher level of costs compared to the corresponding period of the previous year is primarily an increase in the costs of materials and energy consumption (+ 167.8% y/y) and external services (+146.1% y/y) due to higher number of performed air operations.
• Gross result on the sale of the company amounted to PLN 164.0 million (+5.5% y/y).
• In Q3'22, the company recorded PLN 56.9 million in other operating income, which was related to the remission of the PFR loan.
• At the IFRS16 EBITDA level, Enter Air reported a profit of PLN 266.6 million (+29.4% y/y).
• The company's financial balance amounted to PLN -103.3 million (of which PLN -91.0 million were exchange differences from the balance sheet valuation). The result was increased by the profit on the settlement of entities accounted for using the equity method (PLN 5.5 million - applies to Chair Airlines AG).
• In the discussed period, the company generated a net result of PLN 104.0 million (+37.6% y/y).
• In the discussed period, cash flow from operating activities amounted to PLN 240.8 million (vs. PLN 226 million in the previous year), investment CF = PLN - 0.3 million, and financial CF = PLN -83.5 million. At the end of September 2022, the group had PLN 448.9 million in cash (+PLN 164.9 million q/q).
• Next year, the company wants to fly more from Western Europe. Already, it is noting a significant increase in revenues from abroad, it intends to mark its presence more strongly on the Scandinavian and German-speaking markets, where it is gaining more and more recognition and is appreciated for its quality.
• In the summer season, the company used the entire available fleet of 25 aircraft (23 Boeing 737-800 aircraft and 2 737 MAX 8 aircraft) and two additional wet-lease aircraft. In Poland, Enter Air operated connections for the largest tour operators and, at the same time, its long-term partners. Before the start of the season, the carrier signed charter contracts for the Summer 2022 and Winter 2022/23 seasons with TUI Poland (with an estimated value of PLN 543.3 million), Coral Travel Poland (with an estimated value of PLN 312.6 million) and Rainbow Tours (with an estimated value of PLN 312.6 million). PLN 159.5 million). Enter Air also cooperates with Itaka Holdings.
• The Group signed further annexes amending lease agreements, which mainly concerned changes to schedules and rules for calculating lease payments during the Covid-19 pandemic. The agreements are aimed at reducing the group's financial burden in the winter, when sales proceeds are significantly lower.
• At the end of September 2022, the average employment was 538 people vs. 462 in 2021
Analyst: Krzysztof Tkocz krzysztof.tkocz@bdm.pl tel.: (+48) 516 086 705
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