BREAKING NEWS – 24.02.2024

In the press release dated April 19, 2024, Convergenze SpA – Società Benefit, active in the Telecommunications and 100% green Energy sectors, present throughout the national territory through the patented EVO (Electric Vehicle Only) network and its own fiber optic network with the innovative XGS-PON technology, and listed on the Euronext Growth Milan market – reviewed the preliminary revenues as of March 31, 2024, and some of the main performance indicators, which were not subject to audit. Additionally, the Board of Directors resolved to establish a limited liability company under Albanian law, to support Convergenze’s entry into the telecommunications sector. The first quarter of 2024 was certainly positive for the Company. Specifically, Convergenze reported revenues of €6.00 million, showing an increase of 19.3% compared to €5.00 million generated in the first three months of 2023.  The performance of the Energy Business Unit was particularly outstanding, recording an increase of 23.1%, achieving revenues of €3.20 million, compared to €2.60 million in 1Q23. The TLC Business Unit also recorded a significant improvement (+12.5%), achieving €2.70 million compared to €2.40 million in the first quarter of the previous year. Additionally, in the first three months of 2024, more than 62,200 services were contracted, of which: over 51,100 in the Telecom Business Unit, marking a growth of +12.6% compared to the 45,400 in the first three months of 2023; over 11,000 in the Energy Business Unit, indicating an +11.9% increase compared to the 9,900 in 1Q23. After the acquisition of the customer portfolio from Positivo Srl and the subsequent increase in overall registrations, the percentage of users on proprietary FTTH and Wi-Fi networks settled at 50.0%, slightly lower than the 51.7% as of March 31, 2023. Regarding the development of its proprietary fiber optic network, the Company continued its development activities, ensuring that the network reached a total extension of 9,800 km, with an increase of 21.2% compared to the over 8,100 km recorded in the first quarter of 2023. Additionally, by the end of 2023, the number of PODs grew by +13.9%, reaching 9,800 from 8,600 in March 2023, while in March 2024 alone, more than 2.90 million kWh were sold, marking an increase compared to nearly 2.70 million kWh in March 2023. In the press release, the management provided some projections regarding the EBITDA margin for each Business Unit for 1Q24A, estimating: a margin between 29.0% and 30.0% for the Telecom Business Unit, substantially in line with the trends recorded in 2023;  a margin between 5.0% and 6.0% for the Energy Business Unit, which marks a substantial increase compared to previous periods. The quarter under review saw Convergenze continue to implement its development plan, both through organic growth and internationalization strategies. In this regard, the Board of Directors approved the establishment of a limited liability company under Albanian law, an operation that will involve a formation cost between €2,000 and €3,000, as well as a provision of approximately €2,000 in share capital. The establishment of the company locally aims at the geographical expansion of the business into an emerging market rich in potential, characterized by the presence of few operators in the internet transit sector. Convergenze plans to open a new point of presence (POP) and to begin offering its service solely in the wholesale domain, interconnecting with ANIX (Albanian Neutral Internet eXchange), which is the internet exchange point of RASH (the Academic Network of Albania), a service for which it is necessary to be an Albanian legal entity registered with the communications authority in Tirana. The financial results for the first quarter of 2024 testify to the effective continuation of Convergenze’s growth plan, marking a significant increase in revenues and substantial improvements in all reference indicators for the Telecom and Energy Business Units. The strategic advancement in the Albanian telecommunications market, through the establishment of a company in the territory, further strengthens this growth trajectory. These initiatives confirm Convergenze’s ability to expand its international presence and continue to successfully develop its business, strategically positioning itself to capitalize on emerging opportunities in the sector. Taking into account what is reported in the press release, we confirm our estimates: target price €4.25, rating BUY, and risk Medium.

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