{"id":3324,"date":"2023-10-04T10:00:24","date_gmt":"2023-10-04T09:00:24","guid":{"rendered":"https:\/\/esgfire.com\/uncategorized\/landi-renzo-full-year-report-for-2022-shows-higher-revenues-2\/"},"modified":"2023-10-04T12:25:06","modified_gmt":"2023-10-04T11:25:06","slug":"gbc-analysis-comment-on-landi-renzo","status":"publish","type":"post","link":"https:\/\/esgfire.com\/en\/all-posts\/gbc-analysis-comment-on-landi-renzo\/","title":{"rendered":"GBC analysis comment on Landi Renzo"},"content":{"rendered":"

Company<\/b>:
Landi Renzo

\nListings<\/b>:
Milan Exchange & Frankfurt Exchange

\nTicker<\/b>:
LR.MI & ARQ.F

\nMarket cap at time of publication:
<\/b>\u20ac 106 MEUR

\nStock price at time of publication:<\/b>
\u20ac 0.47

\nAnalyst target Price:
<\/b>\u20ac 0.70 EUR by GBC AG

\nBusiness:<\/b>
RNG\/Hydrogen mobility & OEM producer

\nWebsite:<\/b>
https:\/\/landirenzo.com\/<\/a><\/p>\n

ESGFIRE Comment:
\n<\/strong>
\nAnalytical firm GBC have published a comment on our portfolio company Landi Renzo’s first 6 months revenues. The full analysis is found below and can also be accessed here: <\/a>
\nDespite a slightly lowered target price from GBC we think their analysis is very positive on the future outlook for Landi Renzo.<\/p>\n<\/p>\n

\n

Original-Research: Landi Renzo S.p.A. (von GBC AG) (EQS Newswire)<\/h1>\n<\/header>\n
2023-09-20 10:01<\/span>

\nOriginal-Research<\/b>: Landi Renzo S.p.A. – von GBC AGEinstufung von GBC AG zu Landi Renzo S.p.A.Unternehmen: Landi Renzo S.p.A.<\/span>

\nISIN<\/b>: IT0004210289<\/span><\/p>\n

Anlass der Studie<\/b>: Research study (Anno)

\nEmpfehlung<\/b>: Buy

\nKursziel<\/b>: 0.70 EUR

\nLetzte Rating\u00e4nderung:<\/b>

\nAnalyst<\/b>: Marcel Goldmann, Cosmin Filker<\/p>\n

FY 2023 will be a transition year; revenue development strong; earnings
\ndevelopment weak; unfavourable revenue mix weights; from 2025 onwards clear
\nwinner of green energy transition; GBC estimates and price target adjusted;
\nBUY rating confirmed<\/p>\n

Business development FY 2022<\/b><\/p>\n

Based on the published business figures for the past financial year 2022,
\nthe Landi Renzo Group continued its dynamic growth in the past financial
\nperiod despite difficult macroeconomic factors (high inflation on the
\nprocurement and energy markets, etc.) and challenging general conditions
\n(Ukraine war, supply chain problems, etc.). Compared to the same period of
\nthe previous year, Group turnover increased significantly by 26.6% to \u20ac
\n306.30 million (previous year: \u20ac 241.99 million). On a comparable basis
\n(full-year consolidation of SAFE & CEC & Metatron), a significant increase
\nin turnover of 10.1% was also achieved.<\/p>\n

(Organic) growth effects in both business segments – Green Transportation
\nand Clean Tech Solutions – contributed significantly to the dynamic
\nincrease in Group turnover. The main growth drivers were the infrastructure
\nbusiness (Clean Tech Solutions business) and the European automotive
\nsupplier business (OEM business in the passenger car sector) of the Green
\nTransportation division.<\/p>\n

The Group’s revenues were primarily generated by the core business area of
\nGreen Transportation. In this business unit, revenues grew significantly by
\n16.7% to \u20ac 201.73 million (previous year: \u20ac 172.91 million), mainly due to
\nvolume effects in connection with business activities with OEM customers.
\nLandi Renzo benefited in particular from strong OEM customer demand due to
\nincreased sales of LPG cars within the EU.<\/p>\n

The Clean Tech Solutions business field was able to increase its segment
\nrevenues even more strongly with a 51.4% increase to \u20ac 104.57 million
\n(previous year: \u20ac 69.08 million). The significant increase in revenues was
\nmainly based on expanded business activities in the field of biogas and
\nhydrogen applications.<\/p>\n

In contrast to the dynamic development of Group turnover, Landi Renzo had
\nto accept a significant decline in their operating result (EBITDA) of 12.5%
\nto \u20ac 11.04 million (previous year: \u20ac 12.62 million) in fiscal year 2022
\ncompared to the previous year due to high pressure on margins (high
\ninflation on the procurement markets, high energy costs, etc.) and price
\nadjustments that only took effect after a time lag. Consequently, the
\nEBITDA margin also fell significantly to 3.6% (previous year: 5.2%)
\ncompared to the same period last year.<\/p>\n

Adjusted for special costs and one-off costs (e.g. M&A costs), the adjusted
\nEBITDA (Adj. EBITDA) for the past financial year amounted to \u20ac 15.26
\nmillion, which was a moderate increase of 4.4% compared to the previous
\nyear (PY: \u20ac 14.61 million). The adjusted EBITDA margin was 5.0% (previous
\nyear: 6.0%).<\/p>\n

The adjusted EBITDA of \u20ac 9.27 million (previous year: \u20ac 7.21 million) was
\ngenerated by the Green Transportation segment and \u20ac 5.99 million (previous
\nyear: \u20ac 7.41 million) by the Clean Tech Solutions segment. Both segments
\nthus contributed to the Group result in a similar way to their share of
\nGroup turnover. In terms of operating profitability, the adjusted EBITDA
\nmargin of 5.0% was relatively robust compared to the margin level of the
\nprevious year (PY: 6.0%).<\/p>\n

At the after-tax level, however, this technology company recorded a
\nnegative consolidated result (after minorities) of \u20ac -14.28 million and
\nthus had to accept a significant decline compared to the same period of the
\nprevious year (PY: \u20ac -1.02 million). However, it should be taken into
\naccount that the previous year’s result for 2021 was strongly influenced by
\na consolidation gain (\u20ac 8.8 million) from a fair value valuation of SAFE &
\nCEC.<\/p>\n

Overall, this technology company achieved the published turnover guidance,
\nbut fell short of their earnings guidance (improvement in earnings compared
\nto the previous year). Our turnover forecast (turnover of \u20ac 287.74 million)
\nwas clearly exceeded, whereas our earnings forecast (EBITDA of \u20ac 16.77
\nmillion) was not achieved.<\/p>\n

Business development of Q1 2023<\/b><\/p>\n

According to the published business figures for the first three months of
\nthe current financial year, the Landi Renzo Group continued on its growth
\npath in the opening quarter with a 6.4% increase in turnover compared to
\nthe same period last year to \u20ac 71.17 million.<\/p>\n

The Clean Tech Solutions business field proved to be the main growth driver
\nin the first quarter, increasing its segment revenue significantly by 12.1%
\nto \u20ac 23.11 million (Q1 2022: \u20ac 20.62 million). This division was again able
\nto benefit from the increased demand for compression solutions for
\nbiomethane, hydrogen and natural gas.<\/p>\n

The Green Transportation business unit was also able to further expand its
\nsegment revenue with a moderate 3.8% increase in revenue to \u20ac 48.05 million
\n(Q1 2022: \u20ac 46.30 million). The growth of the core business was driven in
\nparticular by a recovery in the European core markets. In addition, a
\ngradual recovery of the M & HD market (especially the Chinese market) also
\ndrove segment growth.<\/p>\n

On the operating result level, contrary to the growth achieved, the
\nadjusted EBITDA (Adj. EBITDA) turned negative at \u20ac -0.96 million (Q1 2022:
\n\u20ac 2.67 million) due to a less favourable revenue mix (lower revenue share
\nof high-margin after-market business) and higher costs on the procurement
\nside.<\/p>\n

Taking into account depreciation, financing and tax effects, a negative
\nconsolidated net result (after minorities) of \u20ac -9.91 million was achieved
\nat the end of the first three months of the current financial year (Q1
\n2022: \u20ac -3.15 million).<\/p>\n

Business development of HY1 2023<\/b><\/p>\n

Landi Renzo S.p.A. published its half-year figures for the current
\nfinancial year 2023 on 11 September 2023. According to these figures, the
\ntechnology group continued its growth course in the first six months
\ndespite a challenging environment (high inflation, Ukraine conflict,
\naftermath of the COVID-19 pandemic, etc.), which had a negative impact on
\nthe company’s performance. Nevertheless, Group revenues increased
\nsignificantly by 5.1% to \u20ac 151.81 million (HY1 2022: \u20ac 144.45 million)
\ncompared to the same period of the previous year.<\/p>\n

The Group’s revenues were mainly generated by the core business area ‘Green
\nTransportation’. In this business unit, segment revenue increased by 11.1%
\nto \u20ac 104.30 million (HY1 2022: \u20ac 93.85 million) due to significant volume
\nincreases in the OEM business.<\/p>\n

OEM segment revenue amounted to \u20ac 65.9 million in the first half of the
\nyear, representing a 33.9% increase in revenue compared to the same period
\nlast year (HY1 2022: \u20ac 49.2 million). Responsible for this dynamic growth
\nwas a strong increase in bi-fuel and LPG engines in the European passenger
\ncar market and an increase in sales in China in the medium and heavy
\ncommercial vehicle (M & HD) segment (natural gas commercial vehicle
\nsegment).<\/p>\n

In contrast, revenues in their after-market business, which includes orders
\nfor conversion kits from dealers and installers in Germany and abroad,
\ndeclined by 16.1% to \u20ac 32.2 million (HY1 2022: \u20ac 32.2 million) as a result
\nof sales requirements in some regions (such as North Africa, Latin America
\nand Eastern Europe).<\/p>\n

The Clean Tech Solutions (SAFE & CEC) business segment generated sales of \u20ac
\n47.50 million in the first six months of the current financial year, which
\ncorresponds to a moderate decline in sales of around 6.0% compared to the
\nsame period of the previous year (HY1 2022: \u20ac 50.6 million). According to
\nthe company, the segment’s revenue was negatively impacted by declining
\nsales volumes in methane applications, especially in the North African
\nmarket. On the other hand, in our estimation, the sales revenues generated
\nwith biogas and hydrogen applications should have recorded significant
\nsales growth compared to the same period last year.<\/p>\n

In contrast to the positive sales development, the consolidated operating
\nresult (EBITDA) turned negative in comparison to the same period of the
\nprevious year at \u20ac -0.31 million (HY1 2022: \u20ac 5.31 million). The decline in
\nearnings is mainly due to an unfavourable revenue mix in the ‘Green
\nTransportation’ segment (more OEM revenue, but less particularly
\nhigh-margin after-market revenue), which could only be partially offset by
\nthe improved margin development in the Clean Tech Solutions segment.<\/p>\n

Adjusted for one-off costs (e.g. M&A costs), adjusted EBITDA (Adj. EBITDA)
\nfor the first half of 2022 amounted to \u20ac 3.90 million, which was below the
\nprevious year’s level (HY1 2022: \u20ac 6.54 million). In terms of earnings
\ncomposition, the ‘Clean Tech Solutions’ segment accounted for the majority
\nof the Group’s earnings with an adjusted segment result of \u20ac 3.80 million
\n(HY1 2022: \u20ac 3.23 million). The ‘Green Transportation’ segment achieved an
\nadjusted EBITDA of \u20ac 0.20 million (HY1 2022: \u20ac 3.32 million).<\/p>\n

On a net level, the technology group had to accept a negative net result
\n(after minority interests) of \u20ac -20.93 million, which was below the
\nprevious year’s result (HY1 2022: \u20ac -6.83 million). It should be noted that
\nthe net result of the first half of the year was also burdened by extensive
\nwrite-offs of deferred tax assets in the amount of \u20ac 5.9 million.<\/p>\n

Forecast and evaluation<\/b><\/p>\n

With the publication of the half-year figures, Landi Renzo\u2019s management has
\nadjusted its previous corporate guidance (previously expected: increase in
\nsales and improved margin development compared to the previous year)
\ndownwards.<\/p>\n

Based on the results of the first half of the year and the existing order
\nbacklog, the company expects revenue growth for the current year in the
\ncore ‘Green Transportation’ segment, which should result primarily from
\nhigher sales in the OEM segment. For the ‘Clean Tech Solutions’ segment,
\nthe technology company expects revenues at the level of the previous year,
\nbut an improvement in profitability (on an adjusted EBITDA basis) compared
\nto the previous year. With regard to the profitability (on an adjusted
\nEBITDA basis) of the ‘Green Transportation’ segment, Landi Renzo expects a
\nlower profitability compared to the previous financial year. However, a
\nsignificantly better margin development is expected for the second half of
\nthe financial year compared to the first half.<\/p>\n

Against the background of the earnings performance below our expectations
\nand the adjusted corporate outlook, we have adjusted our previous earnings
\nforecasts downwards. For the current financial year and the following year
\n2024, we now expect EBITDA of
\n\u20ac 9.58 million (previously: \u20ac 30.61 million) and \u20ac 24.76 million
\n(previously: \u20ac 38.50 million) respectively. For the following financial
\nyear 2025, which we have included in our detailed estimate period for the
\nfirst time, we expect revenue of \u20ac 379.73 million and EBITDA of \u20ac 37.94
\nmillion.<\/p>\n

The significant earnings growth we forecast from the 2024 financial year
\nonwards should be achieved through the recovery of the after-market
\nbusiness and the increased expansion of the high-margin M & HD and
\ninfrastructure business. In parallel to the expected significant
\nimprovement in earnings, profitability should also increase significantly.<\/p>\n

Overall, we remain convinced that the Landi Renzo Group will succeed in
\nbenefiting from the advancing energy transition with its good market
\nposition in both business areas. In particular, the continuing high level
\nof political support (US Inflation Reduction Act, REPower EU Plan, etc.) to
\npromote investments in renewable energies (including diversification of
\nenergy supply) and green mobility\/transportation forms and the
\ninfrastructure required for this (hydrogen filling stations, etc.) should
\nfurther boost future business development.<\/p>\n

Based on our lowered earnings forecasts for the financial years 2023 and
\n2024 and the increased cost of capital due to the rise in the risk-free
\ninterest rate (from 1.25% to 2.00%) in our valuation model, we have lowered
\nour previous target price to \u20ac 0.70 (previously: \u20ac 0.98) per share. The
\nroll-over effect (price target related to the following FY 2024 instead of
\nthe previous FY 2023) has counteracted an even stronger price target
\nreduction. With regard to the current price level, we continue to give the
\nLandi Renzo share a ‘BUY’ rating and see significant upside potential.<\/p>\n

Die vollst\u00e4ndige Analyse k\u00f6nnen Sie hier downloaden<\/b>:
\nhttp:\/\/www.more-ir.de\/d\/27781.pdf<\/p>\n

Kontakt f\u00fcr R\u00fcckfragen<\/b>
\nGBC AG
\nHalderstrasse 27
\n86150 Augsburg
\n0821 \/ 241133 0
\nresearch@gbc-ag.de
\n++++++++++++++++
\nOffenlegung m\u00f6glicher Interessenskonflikte nach \u00a7 85 WpHG und Art. 20 MAR. Beim oben analysierten Unternehmen ist folgender m\u00f6glicher Interessenkonflikt gegeben: (6a,11); Einen Katalog m\u00f6glicher Interessenkonflikte finden Sie unter: http:\/\/www.gbc-ag.de\/de\/Offenlegung
\n+++++++++++++++

\nDate (time) of completion<\/b>: 19\/09\/2023 (13:27 pm)

\nDate (time) of first distribution<\/b>: 20\/09\/2023 (10:00 am)<\/p>\n

——————-\u00fcbermittelt durch die EQS Group AG.——————-<\/p>\n

F\u00fcr den Inhalt der Mitteilung bzw. Research ist alleine der Herausgeber bzw.
\nErsteller der Studie verantwortlich. Diese Meldung ist keine Anlageberatung
\noder Aufforderung zum Abschluss bestimmter B\u00f6rsengesch\u00e4fte.<\/p>\n

About ESGFIRE<\/strong><\/p>\n<\/p>\n

ESGFIRE is an investment company and research firm that focuses on ESG companies with either an environmentally friendly service or product. ESGFIRE has a performance record of over 1000 % returns since 2018.<\/strong><\/p>\n

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