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Original-Research: Landi Renzo S.p.A. - von GBC AG
Einstufung von GBC AG zu Landi Renzo S.p.A.
Unternehmen: Landi Renzo S.p.A.
ISIN: IT0004210289
Anlass der Studie: Research study (Note)
Empfehlung: Buy
Kursziel: 0.60 EUR
Letzte Ratingänderung:
Analyst: Marcel Goldmann, Cosmin Filker
Nine-months 2023: Landi Renzo continues to grow thanks to strong OEM
business; unfavourable sales mix weighs on profitability; operating margin
recovery continues in Q3; GBC estimates and price target adjusted; Buy
rating confirmed
Business performance 9M 2023
The Landi Renzo Group announced its nine-month figures for the current 2023
financial year in mid-November. Based on these figures, the technology
group continued its growth streak in the first three quarters of the
financial year despite difficult conditions (war in Ukraine, inflationary
pressure, higher interest rates, etc.). Group sales increased moderately by
2.2% to EUR 221.14 million compared to the same period of the previous year
(9M 2022: EUR 216.35 million).
The strong expansion of business in the main business area of 'Green
Transportation' proved to be a key growth driver. This enabled the company
to benefit significantly from the increased demand from leading car
manufacturers for technological solutions for more climate-friendly
mobility and more environmentally-friendly drive systems in the volume
sector (mass car market).
The consolidated sales revenue generated was primarily driven by the core
business segment 'Green Transportation' (share of sales: 70.1%). In this
business segment, sales revenue increased significantly by 9.8% to EUR 155.01
million (9M 2022: EUR 141.24 million), mainly thanks to stronger OEM
business.
The increased growth in the OEM sales channel (9M 2023: +33.2% to EUR 98.70
million) was driven by a sharp rise in orders for bi-fuel engines and
increased sales of components in the OEM Mid & Heavy Duty segment. Due to
weaker sales in some Latin American and Eastern European markets, the
After-Market sales channel recorded a significant decline in revenue to EUR
56.30 million (9M 2022: EUR 67.10 million).
In contrast to the core business ('Green Transportation'), the 'Clean Tech
Solutions' business division recorded a significant decline in segment
sales to EUR 66.13 million (9M 2022: EUR 75.12 million). The main reason for
this decline in sales was not only the reduced production, which
particularly affected the third quarter, but also the postponement of some
major orders planned for 2023 to the following financial year 2024.
In contrast to the positive Group sales trend, Landi Renzo suffered a
significant decline in operating earnings (EBITDA) to EUR -1.12 million (9M
2022: EUR 7.07 million). This was mainly due to an unfavourable sales mix in
the 'Green Transportation' business segment (lower-margin OEM car sales
share), a lower business volume in the 'Clean Tech Solutions' segment and
higher fixed costs incurred to strengthen the company's operating
structure. As a result, the EBITDA margin also fell compared to the same
period of the previous year and even slipped into negative territory at -
0.5% (9M 2022: 3.3%).
This decline in consolidated operating profit was only partially offset by
an agreed list price change with a major customer of the Landi Renzo Group
in the OEM distribution channel in the second half of the half-year and a
price increase in the OEM Mid & Heavy Duty business area in the final
months of the financial year.
Adjusted for special costs and one-off costs (e.g. M&A costs or
restructuring costs), adjusted EBITDA (Adj. EBITDA) of EUR 4.57 million was
achieved in the past three quarters, which was significantly below the
earnings level of the same period in the previous year (9M 2022: EUR 8.70
million). The adjusted EBITDA margin (Adj. EBITDA margin) also fell
accordingly to 2.1% (9M 2022: 4.0%). The (adjusted) Group EBITDA of EUR 3.25
million (9M 2022: EUR 4.28 million) was primarily attributable to the Clean
Tech Solutions segment. Meanwhile, the core business segment 'Green
Transportation' contributed EUR 1.33 million (9M 2022: EUR 4.42 million) to the
Group result.
At the after-tax level, the technology group recorded a negative
consolidated net result (after minority interests) of EUR -27.73 million
compared to the same period of the previous year and thus had to accept a
significant decline in net earnings compared to the same period of the
previous year (9M 2022: EUR -10.12 million). In addition to the weaker
operating performance and high one-off extraordinary costs, significant
write-downs on a portion of the deferred tax assets recognised in the
previous year for tax losses also had a significant negative impact on the
earnings trend. In addition, significantly higher (incurred) tax expenses
of EUR 5.62 million (9M 2022: EUR 1.02 million) also had a negative impact on
earnings.
Business performance in Q3 2023
At a quarterly level, the Landi Renzo Group recorded a 3.6% decline in
consolidated sales to EUR 69.33 million (Q3 2022: EUR 71.91 million) compared
to the same quarter of the previous year due to weaker business development
in its infrastructure business segment. Segment sales in the Clean Tech
Solutions division fell by 24.2% to EUR 18.58 million at the end of the third
quarter (Q3 2022: EUR 24.52 million), mainly due to a lower production
volume. The decline in production volume was primarily the result of orders
being postponed to the following financial year 2024.
By contrast, the core business area 'Green Transportation' developed in the
opposite direction. Thanks to increased OEM customer demand for
technological solutions for bi-fuel engines in particular, segment revenue
in this division increased significantly by 7.1% to EUR 50.75 million (Q3
2022: EUR 47.39 million).
At Group operating result level, adjusted EBITDA (Adj. EBITDA) fell by
30.1% to EUR 0.65 million (Q3 2022: EUR 2.16 million), primarily due to the
decline in sales and earnings in the Clean Tech Solutions division. At the
same time, the adjusted EBITDA margin fell to 1.00% (Q3 2022: 3.0%).
Forecast and evaluation
With the publication of its nine-month and Q3 figures, the Landi Renzo
Group has confirmed its most recently adjusted corporate guidance for the
2023 financial year in the form of the outlook for the two business
segments 'Green Transportation' (sales growth and lower profitability
compared to the previous year, but margin improvement in H2 2023) and
'Clean Tech Solutions" (sales at the previous year's level, but with an
improvement in profitability on an Adj. EBITDA basis).
In this context, the technology group specifically expects a slight
increase in sales in the core segment 'Green Transportation' for the fourth
quarter of the current financial year, which has already begun, compared to
the previous third quarter, which should result in particular from
increased sales in the OEM sales channel. Due to the increase in
profitability achieved in this segment in the previous third quarter, Landi
Renzo expects a (further) improvement in adjusted EBITDA for the fourth
quarter compared to the previous nine months. After the 'Clean Tech
Solutions' segment suffered from postponed orders in the third quarter, the
technology company is nevertheless anticipating an increase in sales and
profitability for the current fourth quarter compared to the previous
quarter.
In view of the company's performance falling short of our expectations, the
significant slowdown in growth momentum and the persistently difficult
general conditions, we have adjusted our previous sales and earnings
estimates downwards. For the current 2023 financial year, we are now
forecasting sales of EUR 307.14 million (previously: EUR 323.88 million) and
EBITDA of EUR 0.64 million (previously: EUR 9.58 million). Our significantly
reduced operating earnings forecast is the result of a lower expected
business volume as well as significantly higher expected one-off costs and
special costs (e.g. restructuring costs).
For the following financial year 2024, we expect sales of EUR 316.86 million
(previously: EUR 357.17 million) and EBITDA of EUR 13.31 million (previously: EUR
24.76 million). In the following year 2025, sales and EBITDA should
increase again to EUR 345.89 million (previously: EUR 379.73 million) and EUR
21.10 million (previously: EUR 37.94 million) respectively.
Our forecast for the Landi Renzo Group's future margin recovery is based on
rather conservative assumptions, i.e. the expected improvement in Group
profitability may be significantly stronger if, for example, the
after-market business and infrastructure business recover more quickly.
Overall, despite their temporary weakness, we believe that the Landi Renzo
Group is in a good starting position to return to a significant growth
trajectory from the coming 2024 financial year. The expected recovery of
the high-margin after-market business and the increased expansion of the
infrastructure and MHD business (mid- and heavy-duty business) should prove
to be key growth drivers. Landi Renzo has recently gained significant
momentum, particularly in the expansion of their high-margin MHD business
(LNG & CNG trucks), and should also be able to continue their growth streak
in this niche. Thanks to an expected improved sales mix in the 'Green
Transportation segment' (higher share of the lucrative after-market
business and MHD business) and the forecast recovery of their profitable
infrastructure business, this technology company should be able to
significantly improve its earnings situation from the coming financial
year.
The measures initiated by the management to optimise and strengthen their
business model and corporate structure should also help the technology
group to continue its growth trajectory in the area of sustainable
mobility, particularly in mid and heavy-duty vehicles, as well as in the
area of natural gas, biomethane and hydrogen infrastructures. At the same
time, the acceleration of growth and the optimisation of their business
model should also lead to a significant improvement in future
profitability.
We assume that Landi Renzo's management will publish new corporate guidance
in the first quarter of the coming 2024 financial year.
In light of our lowered sales and earnings forecasts for the current
financial year and subsequent years, we have lowered our previous price
target to EUR 0.60 (previously: EUR 0.70) per share. In view of the current
share price level, we therefore assign a 'BUY' rating and see significant
upside potential in the Landi Renzo share.
Die vollständige Analyse können Sie hier downloaden:
http://www.more-ir.de/d/28597.pdf
Kontakt für Rückfragen
GBC AG
Halderstrasse 27
86150 Augsburg
0821 / 241133 0
research@gbc-ag.de
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Date (time) of completion: 21/12/2023 (7:21 am)
Date (time) of first distribution: 21/12/2023 (10:00 am)
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