| Reway Group, the Italian leading player for the rehabilitation of road and motorway infrastructures, has announced the signing of an agreement for the acquisition of 70.0% of the share capital of Se.Gi. SpA, one of the leading Italian operators in the maintenance of infrastructure and civil works in the railway sector. The operation allows Reway Group to expand its operations in the ordinary and extraordinary railway maintenance sector and benefits from the important track record and market presence of the newly acquired company. As a result of the operation, we are modifying our estimates for both the current year and the upcoming years. In particular, we estimate the value of production for FY23E to be €137.75 million and an EBITDA of €26.20 million, corresponding to a margin of 19.0%. For the following years, we project a growing value of production, reaching €231.00 million in FY25E (CAGR 22-25: 27.8%), with an EBITDA of €48.50 million, corresponding to an EBITDA margin of 21.0%. We conducted the valuation of Reway Group’s equity value based on the DCF methodology and the multiples of a sample of comparable companies. The DCF method (which, in the calculation of the WACC, also includes a specific risk equal to 1.5% for prudential purposes) returns an equity value equal to € 326.1 million. The equity value of Reway Group using market multiples is equal to € 224.7 million (including a 10.0% discount). The result is an average equity value of approximately € 275.4 million. The target price is € 7.15 (prev. € 6,00), BUY rating and MEDIUM risk. |