Production date: 31 March 2021 - 18:00 CET

Publishing date: 1 April 2021 - 07:00 CET

Sebino

Rating: BUY

Italy

FTSE AIM Italia

Fire & Security

Target Price: € 8,77 (from €4.68)

Risk: Medium

Stock performance

1M

3M

6M

1Y

Stock performance relative to FTSE AIM Italia

absolute

30,77%

58,99%

87,29%

67,42%

to FTSE AIM Italia

31,52%

50,27%

67,35%

46,08%

to FTSE STAR Italia

30,81%

55,05%

68,86%

7,70%

to FTSE All-Share

30,82%

54,91%

65,95%

31,18%

to FTSE Italia Small Cap

30,65%

49,73%

63,24%

20,49%

Stock Data

Price

€ 4,42

Target price

€ 8,77

Upside/(Downside) potential

98,4%

Bloomberg Code

SEB IM Equity

Market Cap (€m)

€ 58,71

EV (€m)

€ 63,92

Free Float

13,42%

Share Outstanding

13.282.000

52-week high

€ 4,50

52-week low

€ 2,15

Average daily volumes (3m)

N/A

FY20 Results

The results of FY20 are very positive with profitability well above our estimates. Revenues grew by 24.7% YoY up to €49.4 million (our estimate €44.4 million), while EBITDA grew by 97.9% YoY up to €11.3 million (our estimate €7.11 million). The EBITDA margin is therefore 22.8% (14.4% in FY19 and 16% according to our estimate). Very significant is the cash production of the ordinary operations, equal to € 8.0 million before the payment of € 1.5 million of dividends and € 1.46 million paid for the purchase of 100% of the shares of Sebino Service Srl in July 2020. These results are even more positive when read in the light of the pandemic.

Key Financials (€m )

FY20A

FY21E

FY22E

FY23E

Value of Production

49,4

56,1

62,1

68,1

EBITDA Adj.

11,3

12,1

13,4

14,9

EBITDA

11,3

12,1

13,4

14,9

EBIT

5,0

11,0

12,3

13,6

Net Profit

7,5

8,0

9,0

10,0

EBITDA Adj. margin

22,8%

21,5%

21,6%

21,8%

EBIT margin

10,0%

19,6%

19,8%

20,0%

Net Profit margin

15,3%

14,3%

14,5%

14,7%

2021-23E forecast update

The strategic factors that characterized 2020 and that have allowed a 24.7% growth of turnover and above all 97.9% growth of EBITDA, we believe can be present also for the coming years. While our new estimates forecast a substantially stable value of production compared to previous estimates, we believe that the growth of marginality, measured by EBITDA, may be more significant. In other words, we are convinced that the level of EBITDA margin reached in 2020 and equal to 22.8% (from 14.4% of FY19), can be considered sustainable in the medium term. We expect the same to reach 23.1% in FY24E.

Main Ratios

FY20A

FY21E

FY22E

FY23E

EV/EBITDA Adj. (x)

5,7

5,3

4,8

4,3

EV/EBIT (x)

12,9

5,8

5,2

4,7

P/E (x)

7,8

7,3

6,5

5,9

Antonio Tognoli

+39 02 87208 703

antonio.tognoli@integraesim.it

Valuation Update

We have conducted the valuation of Sebino equity value based on the DCF and multiples. The DCF method (which in the calculation of the WACC includes for prudential purposes also a specific risk of 2.5%) provides an equity value of € 104.0 million. The equity value of Sebino using market multiples is € 129.0 million (including a discount of 25%). The result is an average equity value of approx. € 116.7 million. The target price is €8.77

(from 4.68) per share. We confirm BUY rating and MEDIUM risk unchanged.

1. Economics & Financials

Fig. 1 - Economics & Financials *

CONSOLIDATED INCOME STATEMENT (€/mln)

FY19A

FY20A FY21E FY22E FY23E FY24E

Revenues

39,68

48,91

56,00

62,00

68,00

74,80

Other Revenues

0,06

0,45

0,10

0,10

0,10

0,11

Value of Production

39,74

49,36

56,10

62,10

68,10

74,91

COGS

16,15

17,39

20,36

22,54

24,59

26,43

Services

12,01

13,07

14,85

16,44

18,03

19,57

Use of assets owned by others

0,72

1,00

1,15

1,30

1,46

1,63

Employees

4,29

6,11

7,08

7,72

8,38

9,10

Other Operating Expenses

0,86

0,52

0,60

0,68

0,76

0,85

EBITDA

5,70

11,28

12,05

13,42

14,88

17,33

EBITDA

14,4%

22,8%

21,5%

21,6%

21,8%

23,1%

D&A

0,75

0,91

1,03

1,14

1,25

1,38

EBIT

4,95

10,37

11,02

12,27

13,63

15,95

EBIT Margin

12,5%

21,0% 19,6% 19,8% 20,0% 21,3%

Financial Management

(0,15)

(0,16)

(0,12)

(0,10)

(0,09)

0,00

EBT

4,80

10,21

10,90

12,17

13,54

15,95

Taxes

1,54

2,68

2,86

3,20

3,55

4,19

Net Income

3,26

7,53

8,04

8,98

9,98

11,76

CONSOLIDATED BALANCE SHEET (€/mln)

FY19A

FY20A FY21E FY22E FY23E FY24E

Fixed Assets

4,40

5,62

6,40

6,55

6,60

7,60

Account receivable

18,47

24,33

26,50

29,00

31,50

34,50

Inventories

1,22

1,38

1,80

2,20

2,30

2,50

Account payable

8,92

11,91

13,00

14,60

15,80

17,20

Operating Working Capital

10,76

13,81

15,30

16,60

18,00

19,80

Other receivable

1,59

1,19

1,80

2,20

2,55

2,95

Other payable

1,65

2,05

2,50

3,20

3,60

3,90

Net Working Capital

10,70

12,95

14,60

15,60

16,95

18,85

Severance Indemnities & Other Provisions

1,46

2,25

2,35

2,55

2,70

2,95

NET INVESTED CAPITAL

13,64

16,32

18,65

19,60

20,85

23,50

Share Capital

1,15

1,33

1,33

1,33

1,33

1,33

Reserves

4,02

9,10

12,87

16,89

21,37

26,37

Net Income

3,26

7,53

8,04

8,98

9,98

11,76

Equity

8,43

17,96

22,23

27,19

32,69

39,46

Cash & Cash Equivalent

2,45

11,80

12,98

16,44

20,64

24,21

Short Term Debt to Bank

2,52

0,92

0,90

0,85

0,80

0,75

M/L Term Debt to Bank

5,15

9,24

8,50

8,00

8,00

7,50

Net Financial Position

5,21

-1,64

-3,58

-7,59-11,84-15,96

SOURCES

13,64

16,32

18,65

19,60

20,85

23,50

CONSOLIDATED CASH FLOW (€/mln)

FY19A

FY20A FY21E FY22E FY23E FY24E

EBIT

4,95

10,37

11,02

12,27

13,63

15,95

Taxes

1,54

2,68

2,86

3,20

3,55

4,19

NOPAT

3,41

7,69

8,16

9,08

10,07

11,76

D&A

0,75

0,91

1,03

1,14

1,25

1,38

Change in receivable

(6,26)

(5,87) (2,17) (2,50) (2,50) (3,00)

Change in inventories

(0,06)

(0,17)

(0,42)

(0,40)

(0,10)

(0,20)

Change in payable

3,66

2,99

1,09

1,60

1,20

1,40

Change in others

0,31

0,79

-0,15

0,30

0,05

-0,10

Change in NWC

-2,35

-2,25

-1,65

-1,00-1,35-1,90

Change in provisions

0,75

0,79

0,10

0,20

0,15

0,25

OPERATING CASH FLOW

2,57

7,13

7,64

9,42

10,12

11,49

Capex

(0,2)

(2,1)

(1,8)

(1,3)

(1,3)

(2,4)

FREE CASH FLOW

2,39

5,00

5,83

8,13

8,82

9,11

Financial Management

(0,15)

(0,16)

(0,12)

(0,10)

(0,09)

0,00

Change in Debt to Bank

0,47

2,50

(0,76)

(0,55)

(0,05)

(0,55)

Change in Equity

(0,83)

2,01

(3,76)

(4,02)

(4,49)

(4,99)

FREE CASH FLOW TO EQUITY

1,88

9,35

1,18

3,46

4,20

3,57

Source: estimates Integrae SIM. * Pro Forma data 2019. In 2020E assets of Riccardi S.r.l. merged into

Newco were consolidated for six months.

1H20 RESULTS

2

1.1 FY20 Results

The results of FY20 are very positive with profitability well above our estimates.

Revenues grew by 24.7% YoY up to €49.4 million (our estimate €44.4 million), while EBITDA grew by 97.9% YoY up to €11.3 million (our estimate €7.11 million). The EBITDA margin is therefore 22.8% (14.4% in FY19 and 16% according to our estimate).

Fig. 2 - 2020 actual vs forecast

€/mln

2020A

2020F

Var %

Value of Production

49,36

44,4

11,2%

Ebitda

11,28

7,11

58,6%

Ebitda margin

22,9%

16,0%

Ebit

10,37

5,66

83,2%

Ebit margin

21,0%

12,7%

Source: Sebino and estimates Integrae SIM.

Italy has recorded an increment of 23.4%, while Romania grew by 27.5%.

Very significant is the cash production of the ordinary operations, equal to

  • 8.0 million before the payment of € 1.5 million of dividends and of € 1.46 million paid for the purchase of 100% of the shares of Sebino Service Srl in July 2020.

These results are even more positive when read considering the pandemic. It is well known that 2020 was characterized by the Covid-19 health emergency, whose greatest impact on the Company was the closure of the construction sites with work in progress for the installation of fire protection systems throughout April. Maintenance activities have been continued regularly.

The total order backlog at the end of the year was equal to € 20 million, in line with that recorded at the end of the last year and was driven in particular by the significance of initiatives concerning new logistics sites, designed to support the substantial increase in e-commerce in our country, stimulated also by the effects induced by the lockdown caused by the health emergency.

Thanks to its structural flexibility in terms of installation costs, carried out mainly by external installers, Sebino did not use the Redundancy fund in 2020.

1.2 New estimates FY20E - FY23E

The higher than estimated results allow us to upgrade the 2021/23E estimates. We also introduce estimates for the 2024E.

According to the Management: "Thanks to the consistency of the Orders Backlog at the end of the year, the Company is optimistic about 2021. The impacts of the health emergency, which have not yet been fully resolved, remain limited. Positive signals, as confirmed also by recent press releases of the Company, come in particular from logistics intended to serve big players in international e-commerce and retail.

The Parent Company continues to watch with interest at the possibility of acquiring medium-small companies with expertise in the field of plant engineering and maintenance of the Security Business Unit.

The reorganization of the Business Unit Service continues following the acquisition of Sebino Service Srl to concentrate all Maintenance activities on the latter and fire protection and security plants activities on the Parent Company".

1H20 RESULTS

3

We remind that on July 2, 2020, Sebino SpA completed the acquisition of the entire business managed by Riccardi Srl of Casale Monferrato (AL), a historical company operating on the market in the field of the maintenance of fire protection systems and equipment, with offices also in Veneto, Sardinia, and Lazio.

The strategic factors that characterized 2020 and that have allowed a 24.7% growth of turnover and above all 97.9% growth of EBITDA, we believe can be present also for the coming years. We expect in particular a strong increase in the orders deriving from the companies operating in the cold chain (starting from the storage of vaccines) that need sophisticated and perfectly functioning fire-fighting systems, up to the activities of the companies operating in the logistics sector, whose business over the past year has literally exploded, changing households' purchasing experience forever, and requiring safe, efficient, and compliant facilities that major competitors often fail to provide.

These are our new estimates for 2021-23E.

Fig. 3 - 2020 actual vs forecast

€/mln

2021E

2022E

2023E

Old

New

Var %

Old

New

Var %

Old

New

Var %

Value of Production

55,00

56,00

1,8%

61,00

62,00

1,6%

67,00

68,00

1,5%

Ebitda

8,63

12,05

39,6%

10,27

13,42

30,7%

11,54

14,88

28,9%

Ebitda margin

15,7%

21,5%

16,8%

21,6%

17,2%

21,9%

Ebit

7,57

11,02

45,5%

9,1

12,27

34,9%

10,25

13,63

32,9%

Ebit margin

13,8%

19,7%

14,9%

19,8%

15,3%

20,0%

Source: estimates Integrae SIM.

While our new estimates forecast a substantially stable value of production compared to previous estimates, we believe that the growth of marginality, measured by EBITDA, may be more significant. In other words, we are convinced that the level of EBITDA margin reached in 2020 and equal to 22.8% (from 14.4% of FY19), can be considered sustainable in the medium term. We expect the same to reach 23.1% in FY24E.

1H20 RESULTS

4

2. Valuation

We conducted the valuation of the equity of Sebino based on the DCF methodology and market multiples of a sample of comparable companies.

2.1 DCF Method

Fig. 4 - WACC

WACC

8,57%

Risk Free Rate

-0,32%

α (specific risk)

2,50%

Market Premium

6,85%

Beta Adjusted

0,9

D/E (average)

0,00%

Beta Relevered

0,9

Ke

8,57%

Kd

2,00%

Source: Integrae SIM

For prudential purposes, we have included a specific risk of 2.5%. This results in a WACC of 8.57%. Compared to the report of last September 29, we highlight the risk premium decline to 6.85% from 8.46% calculated by Prof. A. Damodaran.

Fig. 5 - DCF Valuation

DCF Equity Value

104,0

FCFO actualized

19,6

19%

TV actualized DCF

82,7

81%

Enterprise Value

102,3

100%

NFP (FY20A)

(1,6)

Source: Integrae SIM

With the above data and taking as a reference our estimates and assumptions, the result is an equity value of € 104.0 million.

Fig. 6 - Equity Value - Sensitivity analysis

€/mln

WACC

104

7,1%

7,6%

8,1%

8,6%

9,1%

9,6%

10,1%

2,5%

165,2

148,9

135,5

124,4

115,0

106,9

99,9

2,0%

151,0

137,4

126,1

116,6

108,3

101,2

95,0

Growth

1,5%

139,4

127,9

118,2

109,8

102,6

96,3

90,7

Rate (g)

1,0%

129,7

119,8

111,3

104,0

97,5

91,9

86,8

0,5%

121,5

112,9

105,4

98,9

93,1

88,0

83,4

0,0%

114,4

106,8

100,2

94,3

89,1

84,5

80,3

-0,5%

108,3

101,5

95,6

90,3

85,6

81,3

77,5

Source: Integrae SIM

1H20 RESULTS

5

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Sebino S.p.A. published this content on 01 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 April 2021 11:35:09 UTC.