| Convergenze, in its annual financial report as at December 31, 2022, stated a Value of Production value of € 28.36 million, up 50.3% compared to the FY21A value (€18.87 million), attributable to anomalous energy and natural gas market conditions. The Adjusted EBITDA amounted to € 1.45 million, down 20.5% compared to the previous year (€1.82 million), resulting in an Adjusted EBITDA Margin equal to 5.1%. Due to the aforementioned market conditions, EBIT had a negative value in 2022 of € 0.44 million, compared to € 0.52 million in 2021. Net Income was also negative, equal to € -0.80 million. In light of the FY22A results, we have revised our estimates for both the current year and the coming years. In particular, we estimate an FY23E Value of Production equal to € 23.10 million, and EBITDA equal to € 2.20 million, corresponding to a margin of 9.5%. In the following years, we expect the Value of Production to rise to € 24.80 million in FY25E, with EBITDA equal to € 3.05 million (corresponding to an EBITDA margin of 12.3%), up compared to the € 1.37 million in FY22A (corresponding to an EBITDA margin of 4.8%). We conducted our valuation of the equity value of Convergenze based on the DCF method and multiples of a sample of comparable companies. The DCF method (including, for prudential purposes, a specific risk of 2.5% in the calculation of the WACC) returned an equity value of € 36.2 million. Using market multiples, the equity value of Convergenze is € 16.2 million (including a 25.0% discount). The result is an average equity value of approximately € 26.2 million. The target price is € 3.50 (prev. € 6.00), BUY rating, and MEDIUM risk. |