Another record year underway: revenues and profitability above expectations in 1H22
Sector: Fashion & Luxury
Top-line up by 89% YoY, EBITDA at 24% above FY21 (22%) despite increase in gold price. 1H22 outperformed our expectations as the positive trend already registered in 2H21 was confirmed with volumes far beyond pre-Covidlevels. Sales came in at Euro 27.7 m, posting an 89% increase vs. 1H21 (+78% vs. 1H19). According to Management, export markets showed the highest growth rates thanks much to the contribution of tourist areas where consumer spending has recovered. EBITDA spiked at Euro 6.7 m, +179% YoY (Euro 2.4m in 1H21) as EBITDA margin of 24% overperformed prior year's (16% 1H21and 22% FY21) thanks mainly to good operational leverage (higher sales volumes on fixed costs). Margins were not namely affected by the increase in gold prices during the period as Management, already at the beginning of the year, has put in place hedges. Finally, net income was of Euro 4.7 m, almost five times that of last year (Euro 1.0 m). FOPE closed 1H22 with a Net Cash position of Euro 0.2 m, down vs. year-end2021 of Euro 1.9 m. We recall that the Company paid c. Euro 2.4 m in dividend at the beginning of May.
Positive outlook confirmed for FY22 and beyond. Despite significant macro-economicchallenges, the personal luxury goods market proved resilient in 1H22 and experienced a significant performance driven mainly by the recovery in Europe and strong momentum in the US and China. Over the next six months growth is expected to remain strong and the mid-termthe direction of the personal luxury goods market remains positive. After the remarkable performance over the last 18 months, which has confirmed the soundness of a strategy based on continuous investments in international markets, brand awareness and product development, FOPE looks very well-placedto continue to grow above market rates in a steadily growing industry. Management did not provide guidance for FY22 but expressed confidence about the current business environment and underlined that at the end of June 2022, the order portfolio was in line with previous months and, that "there are currently no signs that suggest significant changes in market trend over the next six months". Management also reaffirmed the commitment to continue to consolidate wholesale markets while considering opportunities to boutique openings in markets with high expected growth rates such as Japan and Malaysia.
Estimate revision and valuation update. Given all the above, we increased our expectations for FY22 now assuming sales of Euro 55 m and an EBITDA margin of 22.5% (20.2% pr.) While leaving our growth and margin assumptions largely unchanged for FY23 only slightly increasing margins following higher sales volumes in absolute terms. We also added FY24 to our explicit forecast and timed NWC assumptions. Overall, we made an average increase in Sales, EBITDA and Net Income of 23%, 35% and 56% respectively. Based on our updated estimates we set a new TP of 29.38 p.s. (Euro18.79 p.s. previously) an increase of 56% vs. our last report despite a worsening interest rate scenario (WACC +90 bps) and peers' de-rating of c. -8%. Our valuation, obtained by weighting equally the DCF and the multiple comparison analysis, provides for a potential upside of c. 20%. At our target price the stock would be trading at P/E 22-23 of 18.0x and 18.8x respectively vs. peers at 28.3x and 24.0x.
Tuesday, September 27, 2022 6:00 PM
Equity Research
UPDATE NOTE 1H22
Euronext Growth Milan
Target Price 29.38 (18.79 pr.)
Market Cap (€ m) 136 | |||||
EV (€ m) 136 | |||||
Market Price (€) 25.20 | |||||
As of 26thSeptember 2022 | |||||
Share Data | |||||
Market | Euronext Growth Milan | ||||
Reuters/Bloomberg | FPE.MI/FPE:IM | ||||
ISIN | IT0005203424 | ||||
N. of Shares | 5,399,608 | ||||
Free Float | 13.10% | ||||
Main Shareholder | Diego Nardin | ||||
Financials | 21A | 22E | 23E | 24E | |
Sales | 40.3 | 55.2 | 61.8 | 68.0 | |
YoY % | 55% | 37% | 12% | 10% | |
EBITDA | 8.8 | 12.4 | 13.6 | 15.0 | |
EBITDA % | 21.8% | 22.5% | 22.0% | 22.0% | |
EBIT | 6.8 | 10.5 | 11.6 | 13.3 | |
EBIT % | 16.8% | 18.9% | 18.8% | 19.5% | |
Net Income | 5.0 | 8.8 | 8.4 | 9.6 | |
Net Debt | (1.9) | (0.7) | (2.3) | (5.1) | |
Net Equity | 25.8 | 32.2 | 36.3 | 41.9 | |
Sustainability | |||||
ESG Profile available | |||||
Performance | |||||
1M | 3M | 1Y | |||
Absolute % | -4% | +32% | +105% | ||
Relative (FTSE Italia | +2% | +37% | +158% | ||
Growth) | |||||
52-week High/Low (Eu) | 28.20 | / | 10.80 |
Luisa Primi
l.primi@irtop.com
1
Equity Research | ||||||||||
UPDATE NOTE 1H22 | ||||||||||
Euronext Growth Milan | ||||||||||
KEY FINANCIALS | ||||||||||
Profit&Loss Statement | 2017A | 2018A | 2019A | 2020A | 2021A | 2022E | 2023E | 2024E | ||
Sales | 28,0 | 31,3 | 35,0 | 26,0 | 40,3 | 55,2 | 61,8 | 68,0 | ||
EBITDA | 3,9 | 6,1 | 6,8 | 3,9 | 8,8 | 12,4 | 13,6 | 15,0 | ||
EBIT | 3,1 | 5,0 | 5,4 | 2,3 | 6,8 | 10,5 | 11,6 | 13,3 | ||
Financial Income (charges) | 0,1 | (0,2) | (0,5) | (0,3) | 0,0 | (0,1) | (0,1) | (0,1) | ||
Pre-tax profit (loss) | 3,2 | 4,7 | 5,0 | 2,1 | 6,8 | 10,4 | 11,5 | 13,2 | ||
Taxes | (0,8) | (1,4) | (0,1) | (0,4) | (1,80) | (1,5) | (3,1) | (3,6) | ||
Net profit (loss) Group | 2,3 | 3,3 | 4,8 | 1,7 | 5,0 | 8,8 | 8,4 | 9,6 | ||
Balance Sheet | ||||||||||
Fixed assets | 6,9 | 9,3 | 12,6 | 13,7 | 12,8 | 12,8 | 12,9 | 13,2 | ||
NWC | 8,9 | 9,5 | 11,2 | 12,1 | 13,9 | 21,2 | 23,7 | 26,1 | ||
M/L Funds | (2,7) | (2,8) | (3,0) | (2,9) | (2,8) | (2,5) | (2,5) | (2,5) | ||
Net Capital Employed | 13,1 | 16,1 | 20,9 | 23,0 | 23,9 | 31,5 | 34,1 | 36,8 | ||
Net Debt/(Cash) | 1,2 | 0,1 | 0,1 | 2,4 | (1,875) | (0,7) | (2,3) | (5,1) | ||
Net Equity | 11,9 | 16,0 | 20,8 | 20,5 | 25,8 | 32,2 | 36,3 | 41,9 | ||
Cash Flow | ||||||||||
Net Profit | 2,3 | 3,3 | 4,8 | 1,7 | 5,0 | 8,8 | 8,4 | 9,6 | ||
Non Cash Items | 1,4 | 1,2 | 1,5 | 1,5 | 1,8 | 1,7 | 2,0 | 1,7 | ||
Change in NWC | (0,0) | (0,7) | (1,7) | (0,9) | (1,8) | (7,3) | (2,5) | (2,4) | ||
Cash Flow from Operations | 3,7 | 3,9 | 4,7 | 2,3 | 5,0 | 3,3 | 7,8 | 8,9 | ||
Capex | (2,7) | (3,5) | (4,7) | (2,7) | (0,9) | (2,0) | (2,0) | (2,0) | ||
Operating Free Cash Flow | 1,0 | 0,3 | 0,1 | (0,4) | 4,1 | 1,2 | 5,8 | 6,9 | ||
Dividend | 0,0 | (0,6) | (1,8) | (2,4) | (0,8) | (2,4) | (4,3) | (4,1) | ||
Change in Equity | (0,0) | 1,3 | 1,7 | 0,5 | 1,0 | 0,0 | 0,0 | 0,0 | ||
Change in Net debt | 1,0 | 1,1 | 0,0 | (2,3) | 4,3 | (1,2) | 1,6 | 2,9 | ||
(1,1) | (0,0) | 2,3 | (4,3) | 1,2 | (1,6) | (2,9) | ||||
Per Share Data | ||||||||||
Current Price | 25,20 | |||||||||
Total shares out (mn) | 5,4 | |||||||||
EPS | 0,43 | 0,62 | 0,90 | 0,31 | 0,93 | 1,63 | 1,56 | 1,78 | ||
DPS | 0,00 | 0,11 | 0,33 | 0,44 | 0,15 | 0,45 | 0,79 | 0,75 | ||
FCF | 0,2 | 0,2 | 0,0 | (0,4) | 0,8 | (0,2) | 0,3 | 0,5 | ||
Pay out ratio | 25% | 53% | 49% | 47% | 48% | 48% | 48% | 48% | ||
Ratios | ||||||||||
EBITDA margin | 13,9% | 19,5% | 19,4% | 15,2% | 21,8% | 22,5% | 22,0% | 22,0% | ||
EBIT margin | 11,0% | 15,9% | 15,5% | 9,0% | 16,8% | 18,9% | 18,8% | 19,5% | ||
Net Debt/Equity (Gearing) | 9,8% | 0,7% | 0,4% | 11,8% | n.m. | n.m. | n.m. | n.m. | ||
Net Debt/EBITDA | 0,3 | 0,0 | 0,0 | 0,6 | n.m. | n.m. | n.m. | n.m. | ||
Interest cover EBIT | -33,5 | 22,5 | 11,3 | 9,0 | -138,4 | 104,6 | 116,4 | 132,7 | ||
ROE | 19,6% | 20,9% | 23,3% | 8,2% | 19,5% | 27,4% | 23,2% | 22,9% | ||
Growth Rates | ||||||||||
Revenues | 21% | 12% | 12% | -26% | 55% | 37% | 12% | 10% | ||
EBITDA | 72% | 56% | 11% | -42% | 123% | 41% | 10% | 10% | ||
EBIT | 96% | 61% | 9% | -57% | 190% | 54% | 11% | 14% | ||
Net Profit | 117% | 43% | 45% | -65% | 200% | 75% | -4% | 14% |
Tuesday, September 27, 2022 6:00 PM | 2 |
Equity Research | ||||||||||||||||
UPDATE NOTE 1H22 | ||||||||||||||||
Euronext Growth Milan | ||||||||||||||||
Key Financials | ||||||||||||||||
1H22A | 1H21A | 1H20A | 1H19A | 2021A | 2020A | 2019A | ||||||||||
Sales | 27.7 | 14.6 | 10.2 | 15.5 | 40.3 | 26.0 | 35.0 | |||||||||
yoy | +89% | 44% | -34% | 2% | +55% | -26% | +12% | |||||||||
EBITDA | 6.7 | 2.4 | 0.7 | 3.2 | 8.8 | 3.9 | 6.8 | |||||||||
margin | 24.2% | 16.4% | 6.9% | 20.6% | 21.8% | 15.6% | 19.4% | |||||||||
EBIT | 5.7 | 1.6 | (0.2) | 2.6 | 6.8 | 2.3 | 5.4 | |||||||||
margin | 20.6% | 11.0% | n.m. | 16.5% | 16.9 | 9.5% | 15.5% | |||||||||
Net Profit | 4.7 | 1.0 | (0.1) | 1.9 | 5.0 | 1.7 | 4.8 | |||||||||
Net Capital Employed | 27.3 | 22.6 | 25.0 | 20.5 | 23.9 | 23.1 | 20.9 | |||||||||
Net Debt (Cash) | (0.2) | 2.0 | 4.2 | 3.9 | (1.9) | 2.6 | 0.1 | |||||||||
Equity | 27.5 | 20.6 | 20.9 | 16.6 | 25.8 | 20.5 | 20.8 | |||||||||
Sources | 27.3 | 22.6 | 25.0 | 20.5 | 23.9 | 23.1 | 20.9 | |||||||||
Source: Group Data | ||||||||||||||||
Estimate revision - Euro m | ||||||||||||||||
Euro m | 21A | 22E Old | 22E New | 23E Old | 23E New | 24E New | ||||||||||
Revenues | 40,3 | 45,1 | 55,2 | 49,6 | 61,8 | 68,0 | ||||||||||
yoy | 55% | 12% | 37% | 10% | 12% | 10% | ||||||||||
EBITDA | 8,8 | 9,1 | 12,4 | 10,2 | 13,6 | 15,0 | ||||||||||
margin | 21,8% | 20,2% | 22,5% | 20,5% | 22,0% | 22,0% | ||||||||||
EBIT | 6,8 | 7,1 | 10,5 | 8,2 | 11,6 | 13,3 | ||||||||||
margin | 16,8% | 15,8% | 18,9% | 16,5% | 18,8% | 19,5% | ||||||||||
Net Profit | 5,0 | 5,2 | 8,8 | 5,9 | 8,4 | 9,6 | ||||||||||
yoy | 200,4% | 3% | 75,1% | 14,3% | -4,4% | 62,3% | ||||||||||
EPS | 0,93 | 0,96 | 1,63 | 1,10 | 1,56 | 1,78 | ||||||||||
Euro m | 21A | 22E Old | 22E New | 23E Old | 23E New | 24E New | ||||||||||
NWC | 13,9 | 15,0 | 21,2 | 16,5 | 23,7 | 26,1 | ||||||||||
Fixed net assets | 12,8 | 13,0 | 12,8 | 13,1 | 12,9 | 13,2 | ||||||||||
Funds | (2,8) | (2,4) | (2,5) | (2,4) | (2,5) | (2,5) | ||||||||||
Net Capital Employed | 23,9 | 25,6 | 31,5 | 27,2 | 34,1 | 36,8 | ||||||||||
Net Debt (Cash) | (1,9) | (3,5) | (0,7) | (5,8) | (2,3) | (5,1) | ||||||||||
Equity | 25,8 | 29,1 | 32,2 | 32,9 | 36,3 | 41,9 | ||||||||||
Sources | 23,9 | 25,6 | 31,5 | 27,2 | 34,1 | 36,8 | ||||||||||
Source: Group Data and PMI Capital Research Estimates
Tuesday, September 27, 2022 6:00 PM | 3 |
Equity Research | ||||||
UPDATE NOTE 1H22 | ||||||
Euronext Growth Milan | ||||||
VALUATION | ||||||
Valuation Summary | ||||||
Method | Weight | Price (Euro) | ||||
Multiple Comparison (20% discount to Peers' FY22-23 EV/EBITDA and P/E) | 50% | 27.52 | ||||
DCF | 50% | 31.24 | ||||
Target Price | 100% | 29.38 | ||||
DCF model | ||||||
DCF Valuation | ||||||
Euro m | ||||||
Perpetual grwoth rate | 1.5% | |||||
WACC | 7.45% | |||||
Sum of PV 2022-27 FCFs | 42.7 | 25% | ||||
Discounted terminal value | 125.8 | 75% | ||||
Enterprise Value | 168.5 | 100% | ||||
Net Cash (1H22) | (0.2) | |||||
Equity Value | 168.7 | |||||
N. of outstanding shares (m) | 5.4 | |||||
Fair Value p.s. | 31.24 | |||||
Multiples Comparison | ||||||||
Sales | EBITDA | NI | 2021A-2023E | |||||
Market | Sales | CAGR | ||||||
Companies | Country | YoY | % | % | ||||
Cap | ||||||||
2021A | 21/20 | 2021E | 2021E | Sales | EBITDA |
Tod's | Italy | 1.353 | 885 | 39% | 18% | -1% | 8% | 18% |
Ferragamo | Italy | 2.383 | 1.136 | 30% | 26% | 7% | 9% | -5% |
Prada | Hong Kong | 12.365 | 3.366 | 39% | 34% | 9% | 14% | 17% |
Moncler | Italy | 11.782 | 1.824 | 27% | 45% | 22% | 25% | 18% |
LVMH | US | 305.377 | 64.215 | 44% | 35% | 19% | 14% | 13% |
Kering | France | 59.035 | 17.645 | 35% | 37% | 19% | 12% | 11% |
Burberry | France | 7.205 | 3.337 | 27% | 29% | 14% | 4% | 6% |
Richemont | Swizerland | 52.715 | 19.181 | 46% | 27% | 11% | 6% | 9% |
Average | 56.527 | 13.949 | 36% | 31% | 12% | 12% | 11% | |
FOPE | ITA | 136 | 40 | 55% | 22% | 12% | 24% | 24% |
Source: FactSet data as of September 26, 2022 | ||||||||||||||||||
Companies | EV/EBITDA | P/E | ||||||||||||||||
21E | 22E | 23E | 21E | 22E | 23E | |||||||||||||
Tod's | 13,5 | 9,8 | 8,5 | n.a. | 74,4 | 34,6 | ||||||||||||
Ferragamo | 13,5 | 9,0 | 10,0 | 28,8 | 34,3 | 52,9 | ||||||||||||
Prada | 14,9 | 10,2 | 9,2 | 37,1 | 27,6 | 22,4 | ||||||||||||
Moncler | 20,0 | n.a. | n.a. | 28,1 | 20,9 | 19,4 | ||||||||||||
LVMH | 18,2 | 12,8 | 11,8 | 25,4 | 21,4 | 19,4 | ||||||||||||
Kering | 14,7 | 8,8 | 8,2 | 17,5 | 14,4 | 13,3 | ||||||||||||
Burberry | 8,2 | 7,4 | 7,1 | 17,6 | 14,6 | 14,0 | ||||||||||||
Richemont | 13,4 | 9,5 | 9,3 | 25,3 | 18,6 | 16,4 | ||||||||||||
Average | 14,5 | 9,7 | 9,2 | 25,7 | 28,3 | 24,0 | ||||||||||||
FOPE | 15,5 | 10,9 | 10,0 | 27,0 | 15,4 | 16,2 | ||||||||||||
Premium/Discount to Peers | 6% | 13% | 9% | 5% | -45% | -33% | ||||||||||||
Source: FactSet data as of September 26, 2022 |
Tuesday, September 27, 2022 6:00 PM | 4 |
Equity Research
UPDATE NOTE 1H22
Euronext Growth Milan
INDUSTRY COMPARISON
FOPE Spa (FPE-IT): PMI Capital Research estimates and Factset Data
EGM Sector: average data for listed on EGM included in the Consumer Durables sub sector: Askoll EVA (EVA- IT), Estrima (BIRO-IT), FOPE (FPE-IT), Gismondi 1754 (GIS-IT), Illa (ILLA-IT), Imprendiroma (IMP-IT), Pozzi Milano (POZ- IT), Radici (RAD-IT).
Industry Peers: average data for a selected group of listed peers (European luxury brands): Tod's (TOD- IT), Ferragamo (SFER-IT), Prada (1913-HK), Moncler (MONC-IT). LVMH (MC-FR), Kering (KER-FR), Burberry (BRBY- GB), Richemont (CFR-CH).
Euronext Growth Milan: average financial and market data for all the companies listed on EGM, reported price performance data are related to the FTSE Italia Index.
FPE-IT | Consumer Durables | XS0072 | ||||||||
FOPE | EGM Sector | Peers Avg | FTSE Italia | |||||||
Growth | ||||||||||
Key Financials | ||||||||||
Revenues | 40,3 | 26,1 | 13.949 | 31,5 | ||||||
EBITDA | 8,8 | 2,8 | 4.516 | 4,8 | ||||||
EBITDA % | 21,8% | 10,9% | 32,4% | 15,3% | ||||||
EBIT | 6,8 | 1,9 | 3.429 | 1,7 | ||||||
EBIT % | 16,9% | 7,4% | 24,6% | 5,3% | ||||||
Earnings | 5,0 | 1,2 | 2.338 | 1,1 | ||||||
Earnings % | 12,4% | 4,6% | 16,8% | 3,4% | ||||||
Net Debt | -1,9 | 4,7 | 752 | 2,0 | ||||||
ND/EBITDA | -0,2 | 1,6 | 0,2 | 0,4 | ||||||
FY18-20 Rev. CAGR | -9% | -37% | -3% | -3% | ||||||
FY21-23 Rev. CAGR | 24% | 28% | 12% | 26% | ||||||
FY18-20 Earnings CAGR | 27% | -65% | -18% | -8% | ||||||
FY21-23 Earnings CAGR | 29% | 96% | 17% | 84% | ||||||
Market Data | ||||||||||
Market Cap | 136,1 | 34,1 | 12.074 | 50,9 | ||||||
EV | 135,9 | 37,6 | 84.779 | 52,9 | ||||||
Free Float | 13.10% | 25,60% | 59,33% | 33,76% | ||||||
ADTT YTD (Eu k) | 46.150 | 26.428 | 80.087.729 | 60.293 | ||||||
Market Multiples | ||||||||||
EV/Sales 2022 | 2,5 | 1,3 | 2,9 | 1,7 | ||||||
EV/Sales 2023 | 2,2 | 1,1 | 2,7 | 1,2 | ||||||
EV/EBITDA 2022 | 11,0 | 10,3 | 9,7 | 11,9 | ||||||
EV/EBITDA 2023 | 10,0 | 8,1 | 9,2 | 8,6 | ||||||
EV/EBIT 2022 | 12,9 | 15,4 | 19,3 | 14,1 | ||||||
EV/EBIT 2023 | 11,7 | 10,8 | 17,4 | 10,7 | ||||||
P/E 2022 | 15,5 | 28,5 | 28,3 | 21,9 | ||||||
P/E 2023 | 16,2 | 15,7 | 24,0 | 16,7 | ||||||
Earnings Yield | 6,5% | 3,5% | 3,5% | 4,6% | ||||||
Stock Performance | ||||||||||
1D | 0,0% | -0,1% | 0% | 0,0% | ||||||
1W | 0,0% | -1,7% | -4% | -4,3% | ||||||
1M | -3,8% | -9,1% | -8% | -5,9% | ||||||
3M | 31,9% | -18,8% | 2% | -3,6% | ||||||
6M | 66,9% | -5,2% | -10% | -14,4% | ||||||
YTD | 117,2% | -8,9% | -24% | 13,9% | ||||||
1Y | 104,9% | -4,2% | -13% | -20,5% |
Source: PMI Captial Research and FactSet data as of 26 September 2022
Tuesday, September 27, 2022 6:00 PM | 5 |
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Fope S.p.A. published this content on 28 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 September 2022 07:15:00 UTC.