| FAE Technology, an Italian Benefit Corporation (Società Benefit) and Innovative SME (PMI Innovativa), specialized in the design, prototyping, planning and production of solutions for the electronics sector, announced the signing, on November 8th, 2023, of a binding agreement for the acquisition of 100.0% of the share capital of the company Elettronica GF Srl. Through this operation, FAE Technology will strengthen its competences in the development and engineering of highly complex proprietary electronic solutions, expand its commercial offerings, and increase the diversification of its customer base. In light of the acquisition of Elettronica GF Srl, we have adjusted our estimates for both the current year and the coming years. In particular, we now estimate an FY23E value of production of € 58.35 million, with an EBITDA of € 6.35 million, corresponding to a margin of 10.9%. In the following years, we expect the value of production to rise to € 109.10 million (CAGR 22A-26E: 28.3%) in FY26E, with EBITDA equal to € 14.25 million (corresponding to a Margin of 13.1%), up from € 3.92 million in FY22A (corresponding to an EBITDA Margin of 9.7%). We conducted our valuation of the equity value of FAE Technology based on the DCF method and on 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 € 76.3 million. Using market multiples, the equity value of FAE Technology is € 65.1 million (including a 25% discount). The results give an average equity value of approximately € 70.7 million. The target price is € 4.60, with a BUY rating, and MEDIUM risk. |