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: BUY with target price 22,0 PLN/share (2022/10/05) LINK
• Revenues in Q3'22 amounted to PLN 569.0m (+15% y/y), 7% above our expectations. A record quarter in the company's history.
• Weak revenues growth in Poland (+1%), still good in other EU markets (+11% y/y). Dynamics slowed in North and South America, but still high (+27% y/y). The biggest surprise was the increase in sales in the Eastern Europe and Asia segment (+35%), despite strong exposure to Russia.
• Subsidiaries based in Eastern Europe (Ukraine and Vostok Moskwa) realised revenues of PLN 111.2m in Q3'22 (+26% y/y), and in Asia (Kazakhstan, Turkey, China) PLN 83.5m (+48% y/y).
• As at the balance sheet date, inventories located in Eastern Europe was PLN 35m (PLN 49m after Q2'22) and receivables from customers of non-related companies from the region was PLN 30m (PLN 37m after Q2'22).
• Gross margin (32.5%) at a markedly improved level q/q and y/y. After a weak Q2'22, we assumed an improvement to 30%. The ratio of SG&A costs to revenue fell y/y and q/q.
• The impact of the other operating activities not significant in Q3'22 (PLN +0.7m).
• EBITDA amounted to PLN 79.4m in Q3'22 (vs. PLN 47.8m a year ago). A much better result than we had anticipated (we expected PLN 49.0m). The reasons for the surprise were mainly the Eastern Europe and Asia segment, which had EBITDA of PLN 46m (comparable to the EU segment), and the low level of unallocated result.
• EBITDA by segment: EU (PLN 49.8m vs. PLN 61.4m a year ago), Eastern Europe and Asia (PLN 46.0m vs. PLN 14.9m), North and South America (PLN 4.0m vs. PLN 2.7m). Nonallocated results PLN -20.4m (PLN -31.2m in Q3'21).
• EBITDA after Q1-3'22 is already at PLN 155m (Selena FM had PLN 166m EBITDA in the entire record 2020). Seasonally, Q4 is usually weaker (the company averaged PLN 18m in the last 3 years).
• Financial activities with a negative impact of PLN -8.0m (impact of interest and other expenses, neutral impact of foreign exchange differences, not assumed in our forecasts).
• Q3'22 net profit at PLN 46.4m (better y/y and above our assumptions).
• Cash flows from operating activities amounted to PLN +100.4m in Q3'22. At the end of the period, the company had net debt of PLN 162m (PLN 108m after adjusting for loans extended to related parties).
• CAPEX in Q1-3'22: PLN 26m.
BDM Comment: Positive. The Company's Q3'22 results are clearly above our expectations due to a very strong result (both revenue and EBITDA) in the Eastern Europe and Asia segment. The company mainly increased revenues from Asian companies (+48% y/y), but Eastern Europe also posted a 28% y/y increase. The positive trend is maintained by the North and South America area. Good sales in Q3'22 in the rest of the EU, while the Polish market looks weak with only a 1% increase in sales, which, with significant inflation in the construction chemicals category, implies a clear decline in volumes. Also of note is the y/y decline in EBITDA profitability in the EU segment. Net debt (PLN 162m, of which PLN 54m finances loans to entities related to the main shareholder) clearly fell thanks to strong operating cash flow. For the last four quarters' results, EV/EBITDA=3.7x, P/E=3.8x.
Analyst: Krzysztof Pado krzysztof.pado@bdm.pl tel.: (+48) 512 338 250
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