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Research, Update 8 Dec 2022

UPDATE – 03.10.2022

Revenues for 1H22A amounted to € 21.53 million. EBITDA as of 30 June 2022 amounted to € 2.60 million, with an EBITDA margin of 12.1%, showing a consistent growth compared to the end of the previous year, when it stood at 8.9%. EBIT in the first half of 2022, after amortization and depreciation of approximately € 0.63 million, amounted to € 1.97 million, with a marginality of 9.1%. The Net Income recorded in the year-half was also positive, which amounted to € 1.30 million. The NFP as of 30 June 2022 amounted to € 17.41 million of debt, compared to € 14.22 million recorded on 31 December 2021.

In  light of the results published in the half-yearly report for 1H22A, we modify our previous estimates both for the current year and for the coming years. In particular, we estimate the FY22E value of production equal to € 45.20 million and EBITDA equal to € 5.00 million, corresponding to a marginality of 11.1%. For subsequent years, we expect the value of production to increase up to € 88.15 million (CAGR 21A*-26E: 12.0%) in FY26E, with EBITDA equal to € 11.00 million (corresponding to an EBITDA margin of 12.5%), up compared to € 4.37 million in FY21A*(corresponding to an EBITDA margin of 8.7%). Finally, we estimate an NFP for the FY26E cash positive and equal to € 5.79 million.

Given the lack of comparable companies, we conducted the assessment of the equity value of G.M. Leather 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 € 72.5 million. The target price is € 6.45, rating BUY and MEDIUM risk.

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