Recommendation: sell | target price: PLN 13.50 | current price: PLN 19.70
SGN PW; SGN.WA | IT, Poland
â–ª Sygnity missed our estimates with its financial results for the three months ended 30 June 2022 (Q3 of FY2021/22).
â–ª The quarterly revenue did post a 4.2% beat at PLN 54.2m, and the gross margin at 30.5% came out higher than our 29.5% forecast, however, after much larger-than-assumed SG&A expenses (PLN 10.2m vs. PLN 7.8m), partly offset by a PLN 0.2m gain on other operating activity, EBIT at PLN 6.2m was a 13% miss on our estimate after falling 21% from the corresponding year-ago quarter.
â–ª Financing activity had zero effect on Q3 2021/22 results whereas we had anticipated a PLN 1.9m loss.
â–ª Sygnity recognized an interest recovery of PLN 1.4m in Q3 following a successful dispute with tax authorities which was also the source of a tax refund that provided a boost to the pre-tax and net profit figures for the quarter, further enhanced by a lower-than-the-usual 19% effective tax rate of 16.9%.
â–ª Summing up, on growing revenues, Sygnity generated lower-than-expected EBITDA and EBIT in Q3 FY’21/22, alongside higher-than-expected SG&A expenses that may or may not have included certain nonrecurring items.
Analyst: Paweł Szpigiel
