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Research, Update 12 Jan 2023

UPDATE – 03.10.2022

At the end of the first half of 2022, the value of production stood at € 5.22 million, 24.9% up compared to the value recorded in 1H21A, equal to € 4.18 million. EBITDA on 30 June 2022 amounted to € 0.86 million, an increase of 16.9% compared to the previous period, equal to € 0.74 million; on the other hand, there was a reduction in EBITDA margin, which went from 17.6% to 16.5%. The Group’s EBIT, after amortization for a total of € 0.42 million, amounted to € 0.44 million, 47.2% up compared to 1H21A (€ 0.30 million). Net Income was also positive, 10.8% up from the first half of the year, equal to € 0.36 million, compared to € 0.32 million in 1H21A. Finally, in terms of Balance Sheet, there was a slight improvement in the NFP, which reached € 1.02 million cash positive, compared to € 0.98 million cash positive on 31 December 2021.

In light of the results published in the half-yearly report for 1H22A, we confirm almost entirely our estimates for both the current year and the coming years. In particular, we estimate FY22E value of production equal to € 11.00 million and EBITDA of € 2.15 million, corresponding to a marginality of 19.5%. For subsequent years, we expect the value of production to increase up to € 17.65 million (CAGR 21A-25E: 17.4%) in 2025E, with EBITDA of € 4.20 million (corresponding to an EBITDA margin of 23.8%), up from € 1.37 million in 2021A (corresponding to an EBITDA margin of 14.7%). As for the estimated investments, we expect Capex 2022E-2025E to be equal to approx. € 4.15 million; finally, we estimate a cash positive NFP for FY25E equal to € 7.42 million.

We have conducted the valuation of Circle equity value based on the DCF methodology and market multiples of a comparable companies sample. The DCF method (which in the calculation of the WACC includes for prudential purposes a specific risk of 2.5%) provides an equity value of € 21.9 million. The equity value of Circle using market multiples is equal to € 18.4 million (with a 25% discount). The result is an average equity value of € 20.1 million. The target price is € 5.00 (prev. € 5.20), BUY rating and MEDIUM risk.
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