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.