Ori­gi­nal-Re­se­arch: Lan­di Ren­zo S.p.A. (von GBC AG): Buy

Re­se­arch | 21 De­zem­ber 2023 00:00

Ori­gi­nal-Re­se­arch: Lan­di Ren­zo S.p.A. – from GBC AG

Clas­si­fi­ca­ti­on of GBC AG to Lan­di Ren­zo S.p.A.

Com­pa­ny Name: Lan­di Ren­zo S.p.A.
ISIN: IT0004210289

Re­ason for the re­se­arch: Re­se­arch Note
Re­com­men­da­ti­on: BUY
Tar­get pri­ce: 0.60 EUR
Last ra­ting ch­an­ge:
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 € 221.14 mil­li­on com­pared to the same pe­ri­od of the pre­vious year (9M 2022: € 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 € 155.01 mil­li­on (9M 2022: € 141.24 mil­li­on), main­ly thanks to stron­ger OEM busi­ness.

The in­creased growth in the OEM sa­les chan­nel (9M 2023: +33.2% to € 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 € 56.30 mil­li­on (9M 2022: € 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 € 66.13 mil­li­on (9M 2022: € 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 € ‑1.12 mil­li­on (9M 2022: € 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 € 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: € 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 € 3.25 mil­li­on (9M 2022: € 4.28 mil­li­on) was pri­ma­ri­ly at­tri­bu­ta­ble to the Clean Tech So­lu­ti­ons seg­ment. Me­an­while, the core busi­ness seg­ment ‚Green Trans­por­ta­ti­on‘ con­tri­bu­ted € 1.33 mil­li­on (9M 2022: € 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 € ‑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: € ‑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 € 5.62 mil­li­on (9M 2022: € 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 € 69.33 mil­li­on (Q3 2022: € 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 € 18.58 mil­li­on at the end of the third quar­ter (Q3 2022: € 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 € 50.75 mil­li­on (Q3 2022: € 47.39 mil­li­on).

At Group ope­ra­ting re­sult le­vel, ad­jus­ted EBITDA (Adj. EBITDA) fell by 30.1% to € 0.65 mil­li­on (Q3 2022: € 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 quar​ter​.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 € 307.14 mil­li­on (pre­vious­ly: € 323.88 mil­li­on) and EBITDA of € 0.64 mil­li­on (pre­vious­ly: € 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 € 316.86 mil­li­on (pre­vious­ly: € 357.17 mil­li­on) and EBITDA of € 13.31 mil­li­on (pre­vious­ly: € 24.76 mil­li­on). In the fol­lo­wing year 2025, sa­les and EBITDA should in­crease again to € 345.89 mil­li­on (pre­vious­ly: € 379.73 mil­li­on) and € 21.10 mil­li­on (pre­vious­ly: € 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 € 0.60 (pre­vious­ly: € 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:

Kon­takt für Rück­fra­gen
Hal­der­stras­se 27
86150 Augs­burg
0821241133 0
Of­fen­le­gung mög­li­cher In­ter­es­sens­kon­flik­te nach § 85 WpHG und Art. 20 MAR. Beim oben ana­ly­sier­ten Un­ter­neh­men ist fol­gen­der mög­li­cher In­ter­es­sen­kon­flikt ge­ge­ben: (6a,11); Ei­nen Ka­ta­log mög­li­cher In­ter­es­sen­kon­flik­te fin­den Sie un­ter: http://​www​.gbc​-ag​.de/​d​e​/​O​f​f​e​n​l​e​g​ung +++++++++++++++
Date (time) of com­ple­ti­on: 21/12/2023 (7:21 am)
Date (time) of first dis­tri­bu­ti­on: 21/12/2023 (10:00 am)

——————-über­mit­telt durch die EQS Group AG.——————-

Für den In­halt der Mit­tei­lung bzw. Re­se­arch ist al­lei­ne der Her­aus­ge­ber bzw. Er­stel­ler der Stu­die ver­ant­wort­lich. Die­se Mel­dung ist kei­ne An­la­ge­be­ra­tung oder Auf­for­de­rung zum Ab­schluss be­stimm­ter Bör­sen­ge­schäf­te.



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Pho­ne: +49 821 241133–0
E‑mail: office(@)gbc-ag.de

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