| Convergenze reported a value of production of € 10.49 million, a decrease of 17.1% compared to the 1H22A figure, equal to € 12.66 million, attributable to the sharp drop in energy prices. With the Energy business unit essentially breaking even, Adjusted EBITDA came in at € 1.31 million, a clear increase (+108.6%) compared to 1H22A, in which it was € 0.63 million, resulting in a margin of 12.5% (5.0% in 1H22A). EBIT amounted to € 0.40 million, compared to the negative 1H22A value of € -0.27 million. The company therefore returned to generating a positive result, with a Net Income of € +0.05 million against the loss of € -0.43 million in 1H22A. In light of the 1H23A half-year results, we have slightly adjusted our estimates for both the current year and the coming years. In particular, we have revised our FY23E estimate for the value of production down to € 22.00 million, due energy price alignments, and for EBITDA to € 2.50 million, corresponding to a margin of 11.4%. In the following years, we expect the value of production to rise to € 24.80 million in FY25E, with an EBITDA of € 3.30 million (corresponding to a margin of 13.3%), 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 equal to 2.5% in the calculation of the WACC) returned an equity value of € 38.4 million. Using market multiples, the equity value of Convergenze is € 16.4 million (including a 25.0% discount). The result gives an average equity value of approximately € 27.4 million. The target price is € 3.65 (prev. € 3.50), with a BUY rating and MEDIUM risk. |