Initiation of Coverage, Research 15 Jul 2024
Initiation of Coverage – 15.07.2024
| Litix SpA is a unique entity in the market, combining art and technology, tradition and innovation, to meet the needs of those who wish to create works in marble and more. The company is classified as a highly integrated player, offering its clients both direct creation services of the desired work and advanced technological solutions for autonomous production. Based in Carrara (MC), Litix was founded in 2023 following the merger by incorporation of Robotor Srl, a company that designs and assembles anthropomorphic robots for multi-axis milling, into Torart Srl, a company that creates sculptures and various types of contemporary art and design works, followed by the renaming of Torart to Litix. Regarding the automation market, advancements in Industry 4.0 technology have ushered in a new era of automation, with companies increasingly investing in automated systems to improve efficiency and reduce costs. Automation, 3D printing, and AI represent great opportunities for creativity and innovation, prompting global brands to invest in R&D to automate their design processes. Additionally, in 2022, the international art market returned to normalcy with the resumption of in-person fairs and auctions. Global art sales increased by 3.0% year-on-year, reaching $67.80 billion, surpassing pre-pandemic levels in 2019 ($64.40 billion). The USA maintained its leading position with 45.0% of global sales, followed by the UK with 18.0%, while China decreased from 20.0% to 17.0%. We conducted the equity value assessment of Litix based on the DCF methodology and the multiples of a sample of comparable companies. The value resulting from the application of the DCF method (which includes a specific risk of 2.5% in the WACC calculation for prudential purposes) is €30.5 million, while the value resulting from the multiples method, applying a 25% discount, is €19.7 million. This results in an average equity value of €25.1 million. The target price is €3.80, with a BUY rating and MEDIUM risk. |