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Initiation of Coverage – 11.05.2022

The Group managed to record a value of production at 30 June 2022 equal to € 7.98 million, a strong growth (+ 545.4%) compared to the first half of 2021, in which the value was equal to € 1.22 million. EBITDA at the end of the first half of 2022 amounted to – € 0.80 million, up 7.1% compared to the previous period, when it amounted to – € 0.86 million. The EBITDA margin in particular increased from – 70.7% to – 10.2%. EBIT, after depreciation and write-downs for a total of € 0.55 million, is equal to – € 1.36 million, worsening compared to 1H21A where it stood at – € 1.22 million. Net Income at the end of the first half of 2022 amounted to – € 1.41 million, down 5.6% compared to the previous period when it amounted to – € 1.33 million.

In light of the results published in the half-yearly report for 1H22A, we are changing our estimates for both the current year and the coming years. In particular, we estimate the value of production 2022E equal to €29.65 million and the EBITDA equal to – € 1.00 million, corresponding to a margin of – 3.4%. For the following years, we expect the value of production to increase to €131.35 million (CAGR 21A-27E: 59.8%) in 2027E, with EBITDA equal to € 8.70 million (corresponding to an EBITDA margin of 6.6%), up compared to – € 1.49 million in 2021A (corresponding to an EBITDA margin of – 18.9%). As for the estimated investments, we expect Capex 2022E-2027E to amount to approximately € 4.60 million. We estimate an NFP for 2027E cash positive and equal to € 12.42 million.

We conducted the assessment of the equity value of Destination Italia based on DCF methodology only. The DCF method (which in the calculation of the WACC includes for prudential purposes also a specific risk of 2.5%) provides an equity value of € 31.5 million. The target price is € 2.60, rating BUY and MEDIUM risk.

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