HOLD
FV PLN 2.94
5% upside
Price as of 14 November 2022 PLN 2.79
SFD reported its 3Q22 results with EBIT of PLN 3.8m and net profit of PLN 2.9m (32% and 33% below our expectations, respectively, on slightly lower sales and higher cost of external services). Below please find key highlights:
• Revenues came in at PLN 81.7m (+37% y/y, 1% below preliminary monthly data of PLN 82.9m). We estimate that e-commerce sales increase by 18% y/y to PLN 40m (comparable to previous quarters) and accounted for nearly half of total sales (vs. 57% share in 3Q21).
• SFD had 28 own stores (+1 q/q) and 67 franchising stores (+2 q/q) as of end-3Q22. Additionally, the company has launched its own e-commerce platform in Romania at that time.
• Gross profit reached PLN 29.4m (+43% y/y), implying gross margin of 35.9% (+1.5pp y/y, in line with our expectations).
• EBIT came in at PLN 3.8m (+32% y/y, 32% below our expectations). Operating costs amounted to PLN 77.8m at that time (vs. our estimate PLN 77.3m). Cost of salaries increased by 26% y/y to PLN 7.7m (and was 5% below our expectations), while cost of external services increased by 49% y/y to PLN 14.2m (4% above our expectations). EBITDA came in at PLN 4.7m (+31% y/y), implying EBITDA margin of 5.7% (vs. 6.0% reported in 3Q21).
• Net profit amounted to PLN 2.9m (+28% y/y, 33% below our expectations). Net financial costs amounted to PLN 0.5m.
• The company had inventory of PLN 60.0m as of end-3Q22 (+79% y/y and +19% q/q). Operating cash flow was negative PLN 5.0m vs. positive PLN 7.8m in 3Q21. Net debt amounted to PLN 21.6m (+67% y/y).
• The company expects to maintain growth rate of revenues in 4Q22 at comparable level to 9M22 (+32% y/y in 9M22 and +32% y/y growth reported already in October) and expand its activity on foreing markets based on own platforms.
Opinion: Negative, as reported 3Q22 results were below our expectations on lower than preliminary sales and higher inflationary pressure on cost of external services, resulting in deterioration of EBITDA margin. Additionally, we point at solid increase in inventory (+19% q/q), resulting in negative operating cash flow and increase in net debt. On the other hand, we note that the company reported sound sales of PLN 28m in October (+32% y/y); however results may remain under pressure on cost inflation.
Analyst: Marek Szymański marek.szymanski@ipopema.pl + 48 22 236 94 12
GPW’s Analytical Coverage Support Programme 3.0
