UPDATE – 15.04.2024

The value of production came in at € 11.37 million, higher than both the € 9.47 million recorded at the end of 2022 (+20.1%) and our previous report’s estimate of € 10.95 million. EBITDA amounted to € 0.53 million, marking a 71.6% decrease compared to the value recorded at the end of the previous financial year (€ 1.87 million) and coming in below our expectation of € 1.65 million. The EBITDA margin was 4.7%, similarly down on the FY22A value of 19.8% and our estimate of 15.1%. EBIT amounted to € 0.14 million (€ 1.67 million in 2022), compared to our estimate of € 1.35 million. Net Income stands at € 0.01 million (€ 1.13 million in 2022), also showing a decline compared to the € 0.85 million projected in our previous estimates. Furthermore, the NFP worsened, going from € 0.88 million in FY22A to € 1.49 million. In light of the results published in the annual report for FY23A, we have adjusted our estimates for both the current year and the coming years. In particular, we now estimate an FY24E value of production of € 11.90 million, and an EBITDA of € 1.15 million, corresponding to a margin of 9.7%. In the following years, we expect the value of production to reach € 15.65 million (CAGR 23A-26E: 11.2%) in FY26E, with EBITDA equal to € 2.70 million (corresponding to a margin of 17.3%), up from € 0.53 million in FY23A (corresponding to an EBITDA margin of 4.7%). Given the lack of comparable companies, we conducted our valuation of the equity value of Deodato Arte based on the DCF method alone. The DCF method (including, for prudential purposes, a specific risk of 2.5% in the calculation of the WACC) returned an equity value of € 26.5 million. The target price is € 0.85, with a BUY rating and MEDIUM risk.

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