Reway S p A : Update Integrae SIM - 12 marzo 2024

B R E A K I N G N E W SE Q U I T Y R E S E A R C H

March 12th 2024

Reway Group

Euronext Growth Milan | Infrastructure Mainteinance | Italy

Gema is awarded orders for € 84.00 million

Rating	Target Price	Risk	RWY IM Price
BUY	€ 7,15
	€ 5,00
unchanged	unchanged	Medium

Stock Data		Stocks performance relative to FTSE Italia Growth
Price	€ 5,00	150				500 k
Target price	€ 7,15
140				450 k
Upside/(Downside) potential	43,0%
130				400 k
Ticker	RWY IM				350 k
120
Market Cap (€/mln)	€ 192,51				300 k
EV (€/mln)	€ 225,85	110				250 k
				200 k
Free Float	16,75%	100
				150 k
		90
Share Outstanding	38.502.281				100 k
52-week high	€ 5,20	80				50 k
52-week low	€ 3,16	70	Jun-23	Sep-23	Dec-23	0
Average daily volumes (3 months)	22.350	Mar-23	Mar-24
RWY IM Equity - Volume	RWY IM Equity	ITAIM Index
			Mattia	Petracca | [e-mail]
			Giuseppe Riviello | [e-mail]

B R E A K I N G N E W S

Gema is awarded orders for € 84.00 million

In a press release of March 7th, 2024, Reway Group SpA - a leading Italian Company in the restoration of road and highway infrastructures, announced that its subsidiary Gema SpA, recognized as one of the leading operators in the field of maintenance of railway infrastructure and civil construction, has been awarded new work orders in the railway sector, for a total amount of approximately € 84.00 million.

The contracts obtained by Gema are mainly attributable to the awarding of four new framework contracts awarded by the Italian Railway Network (RFI), in ATI (Associazione Tem- poranea d'Imprese) with various other partners. In terms of timeframe, the start of activities is expected to take place in the second half of 2024.

Specifically, the most significant contract obtained concerns routine maintenance work on RFI stations and buildings in the regions of Abruzzo, Umbria, Tuscany, Liguria, and Marche. In this area, Gema, as the leader of the ATI, holds 51.0% of the contract, corresponding to a value of approximately € 26.00 million. The duration for such work is expected to be about three years.

In addition to this order, there is another important contract worth about € 24.50 million, which involves Gema in the routine maintenance in ATI, of a railway infrastructure and related stations in Rome. This work provides for a 49.0% participation in the ATI for Gema and will extend for approximately two years.

Gema also holds the leading role (having 64.0% participation in the ATI) in a project for acoustic improvement along RFI's rail network in Tuscany. The contract, worth about €19.00 million for Gema, will last for two years.

Finally, the fourth contract awarded to Gema concerns the design and implementation of extraordinary maintenance works on civil railway infrastructure in Lazio and Sardinia. Gema participates in this project with a 30.7% share within a consortium led by Salcef Group. These works, scheduled to last about two years, represent, for Gema, a value of about € 8.10 million.

In addition to these assignments, Gema has obtained other contracts for the maintenance of rail infrastructure with a total value of € 6.50 million. These additional agreements increase the total value of contracts awarded by Gema under the new management of Reway Group to approximately € 84.00 million.

Based on the press release regarding recently awarded contracts, it is clear that the Group is proceeding positively with its development plan, consolidating its presence in the railway sector. Positioning itself into significant investment initiatives to modernize the network nationwide, the Group demonstrates its ability to respond effectively to the needs of an ever-changing market.

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BUY € 7,15

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Paolo Luccini, CEO of Reway, noted, "These important new orders acquired in the field of railways, just a few months after Reway Group entered that sector, confirm the validity of a strategic choice that has allowed us to grow even in a highly dynamic and expanding market that is at the center of major investments nationwide."

Taking the press release into consideration, while waiting to meet with management and evaluate the 2023 fiscal year results, we confirm our estimates: target price € 7.15 BUY rating and risk Medium.

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B R E A K I N G N E W S

BUY € 7,15

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Economics & Financials

TABLE 1 - ECONOMICS & FINANCIALS

CONSOLIDATED INCOME STATEMENT (€/mln)	FY21A*	FY22A*	FY23E	FY24E	FY25E
Revenues	91,16	109,86	137,00	207,00	230,00
Other Revenues	0,60	0,68	0,75	0,80	1,00
Value of Production	91,76	110,54	137,75	207,80	231,00
COGS	18,99	28,54	38,55	57,80	64,00
Services	27,36	32,22	37,00	55,30	61,90
Use of Asset owned by others	10,48	10,30	12,50	17,00	18,00
Employees	17,39	18,85	22,90	34,50	37,80
Other operating costs	0,64	1,05	0,60	0,70	0,80
EBITDA	16,91	19,59	26,20	42,50	48,50
EBITDA Margin	18,4%	17,7%	19,0%	20,5%	21,0%
D&A	3,66	3,38	5,00	13,00	13,50
EBIT	13,25	16,21	21,20	29,50	35,00
EBIT Margin	14,4%	14,8%	15,5%	14,3%	15,2%
Financial Management	(0,11)	(0,18)	(1,00)	(5,00)	(5,00)
EBT	13,14	16,03	20,20	24,50	30,00
Taxes	4,53	6,06	6,05	8,00	10,00
Net Income	8,60	9,97	14,15	16,50	20,00
Minorities Net Income	0,00	0,00	0,40	4,00	5,00
CONSOLIDATED BALANCE SHEET (€/mln)	FY21A*	FY22A*	FY23E	FY24E	FY25E
Fixed Assets	23,62	22,94	90,00	83,50	76,50
Account receivable	42,76	52,85	70,00	88,00	100,00
Inventories	0,80	0,66	5,00	12,00	16,00
Account payable	21,04	23,63	29,00	40,00	44,00
Operating Working Capital	22,51	29,88	46,00	60,00	72,00
Other receivable	2,68	1,09	45,00	10,00	12,00
Other payable	6,11	9,76	13,50	13,50	13,50
Net Working Capital	19,08	21,22	77,50	56,50	70,50
Severance Indemnities & Other Provisions	1,62	1,58	3,30	4,50	6,00
NET INVESTED CAPITAL	41,08	42,58	164,20	135,50	141,00
Share Capital	0,06	0,06	0,71	0,71	0,71
Reserves	23,63	28,68	58,00	72,15	88,65
Net Income	8,60	9,97	14,15	16,50	20,00
Equity	32,30	38,72	72,86	89,36	109,36
Minorities Equity	0,00	0,00	18,00	22,00	27,00
Cash & Cash Equivalent	6,09	11,66	28,66	41,86	47,86
Short Term Financial Debt	9,15	8,83	9,00	20,00	16,00
M/L Term Financial Debt	5,73	6,70	53,00	46,00	36,50
Net Financial Position Adjusted	8,78	3,86	33,34	24,14	4,64
Other Debt	0,00	0,00	40,00	0,00	0,00
Net Financial Position	8,78	3,86	73,34	24,14	4,64
SOURCES	41,08	42,58	164,20	135,50	141,00

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CONSOLIDATED CASH FLOW (€/mln)	FY22A*	FY23E	FY24E	FY25E
EBIT	16,21	21,20	29,50	35,00
Taxes	6,06	6,05	8,00	10,00
NOPAT	10,15	15,15	21,50	25,00
D&A	3,38	5,00	13,00	13,50
Change in receivable	(10,10)	(17,15)	(18,00)	(12,00)
Change in inventories	0,14	(4,34)	(7,00)	(4,00)
Change in payable	2,58	5,37	11,00	4,00
Change in others	5,24	(40,17)	35,00	(2,00)
Change in NWC	(2,13)	(56,28)	21,00	(14,00)
Change in provisions	(0,05)	1,72	1,20	1,50
OPERATING CASH FLOW	11,35	(34,41)	56,70	26,00
Capex	(2,7)	(72,1)	(6,5)	(6,5)
FREE CASH FLOW	8,65	(106,47)	50,20	19,50
Financial Management	(0,18)	(1,00)	(5,00)	(5,00)
Change in Debt to Bank	0,65	46,47	4,00	(13,50)
Other Debt (Adjustment to NFP)	0,00	40,00	(40,00)	0,00
Change in Equity	(3,55)	37,99	4,00	5,00
FREE CASH FLOW TO EQUITY	5,57	17,00	13,20	6,00

Source: Reway Group and Integrae SIM estimates

*Pro-forma

Data as of last Equity Research Document (Update) of 26/10/2023

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Disclosure Pursuant to Delegated Regulation UE n. 2016/958

Analyst/s certification

The analyst(s) which has/have produced the following analyses hereby certifies/certify that the opinions expressed herein reflect their own opinions, and that no direct and/or indirect remuneration has been, nor shall be received by the analyst(s) as a result of the above opinions or shall be correlated to the success of investment banking operations. Neither the analysts nor any of their relatives hold administration, management or advising roles for the Issuer. Mattia Petracca is Integrae SIM's current Head of Research. Giuseppe Riviello, Alessandro Colombo, Edoardo Luigi Pezzella, Alessandro Elia Stringa and Alessia Di Florio are the current financial analysts.

Disclaimer

This publication was produced by INTEGRAE SIM SpA. INTEGRAE SIM SpA is licensed to provide investment services pursuant to Italian Legislative Decree n. 58/1998, released by Consob, with Resolution n. 17725 of March 29th 2011.

INTEGRAE SIM SpA performs the role of corporate broker for the financial instruments issued by the company covered in this report.

INTEGRAE SIM SpA is distributing this report in Italian and in English, starting from the date indicated on the document, to approximately 300 qualified institutional investors by post and/or via electronic media, and to non-qualified investors through the Borsa Italiana website and through the leading press agencies.

Unless otherwise indicated, the prices of the financial instruments shown in this report are the prices referring to the day prior to publication of the report. INTEGRAE SIM SpA will continue to cover this share on a continuing basis, according to a schedule which depends on the circumstances considered important (corporate events, changes in recommendations, etc.), or useful to its role as specialist.

The table below, shows INTEGRAE SIM's recommendation, target price and risk issued during the last 12 months:

Date	Price	Recommendation	Target Price	Risk	Comment
14/03/2023	3,67	Buy	6,25	Medium	Initiation of Coverage
17/04/2023	3,38	Buy	6,25	Medium	Update
09/10/2023	3,75	Buy	6,00	Medium	Update
26/10/2023	3,84	Buy	7,15	Medium	Update
23/11/2023	4,12	Buy	7,15	Medium	Breaking News
15/02/2024	4,78	Buy	7,15	Medium	Breaking News

The list of all recommendations on any financial instrument or issuer produced by Integrae SIM Research Department and distributed during the preceding 12-month period is available on the Integrae SIM website. The information and opinions contained herein are based on sources considered reliable. INTEGRAE SIM SpA also declares that it takes all reasonable steps to ensure the correctness of the sources considered reliable; however, INTEGRAE SIM SpA shall not be directly and/or indirectly held liable for the correctness or completeness of said sources.

The most commonly used sources are the periodic publications of the company (financial statements and consolidated financial statements, interim and quarterly reports, press releases and periodic presentations). INTE- GRAE SIM SpA also makes use of instruments provided by several service companies (Bloomberg, Reuters, JCF), daily newspapers and press in general, both national and international. INTEGRAE SIM SpA generally submits a draft of the analysis to the Investor Relator Department of the company being analyzed, exclusively for the purpose of verifying the correctness of the information contained therein, not the correctness of the assessment. INTEGRAE SIM SpA has adopted internal procedures able to assure the independence of its financial analysts and that establish appropriate rules of conduct for them. Integrae SIM S.p.A. has formalised a set of principles and procedures for dealing with conflicts of interest. The Conflicts Management Policy is clearly explained in the relevant section of Integrae SIM's web site (www.integraesim.it). This document is provided for information purposes only. Therefore, it does not constitute a contractual proposal, offer and/or solicitation to purchase and/or sell financial instruments or, in general, solicitation of investment, nor does it constitute advice regarding

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financial instruments. INTEGRAE SIM SpA does not provide any guarantee that any of the forecasts and/or estimates contained herein will be reached. The information and/or opinions contained herein may change without any consequent obligation of INTEGRAE SIM SpA to communicate such changes. Therefore, neither INTEGRAE SIM SpA, nor its directors, employees or contractors, may be held liable (due to negligence or other causes) for damages deriving from the use of this document or the contents thereof. Thus, Integrae SIM does not guarantee any specific result as regards the information contained in the present publication, and accepts no responsibility or liability for the outcome of the transactions recommended therein or for the results produced by such transac- tions. Each and every investment/divestiture decision is the sole responsibility of the party receiving the advice and recommendations, who is free to decide whether or not to implement them. Therefore, Integrae SIM and/or the author of the present publication cannot in any way be held liable for any losses, damage or lower earnings that the party using the publication might suffer following execution of transactions on the basis of the information and/or recommendations contained therein.

This document is intended for distribution only to professional clients and qualified counterparties as defined in Consob Regulation no. 20307/2018, as subsequently amended and supplemented, either as a printed document and/or in electronic form.

Rating system (long term horizon: 12 months)

The BUY, HOLD and SELL ratings are based on the expected total return (ETR - absolute performance in the 12 months following the publication of the analysis, including the ordinary dividend paid by the company), and the risk associated to the share analyzed. The degree of risk is based on the liquidity and volatility of the share, and on the rating provided by the analyst and contained in the report. Due to daily fluctuations in share prices, the expected total return may temporarily fall outside the proposed range

Equity Total Return (ETR) for different risk categories

Rating	Low Risk	Medium Risk	High Risk
BUY	ETR >= 7.5%	ETR >= 10%	ETR >= 15%
HOLD	-5% < ETR < 7.5%	-5% < ETR < 10%	0% < ETR < 15%
SELL	ETR <= -5%	ETR <= -5%	ETR <= 0%
U.R.	Rating e/o target price Under Review
N.R.	Stock Not Rated

Valuation methodologies (long term horizon: 12 months)

The methods that INTEGRAE SIM SpA prefers to use for value the company under analysis are those which are generally used, such as the market multiples method which compares average multiples (P/E, EV/EBITDA, and other) of similar shares and/or sectors, and the traditional financial methods (RIM, DCF, DDM, EVA etc). For financial securities (banks and insurance companies) Integrae SIM SpA tends to use methods based on comparison of the ROE and the cost of capital (embedded value for insurance companies).

The estimates and opinions expressed in the publication may be subject to change without notice. Any copying and/or redistribution, in full or in part, directly or directly, of this document are prohibited, unless expressly autho- rized.

Conflict of interest

In order to disclose its possible interest conflict Integrae SIM states that:

• It operates or has operated in the past 12 months as the entity responsible for carrying out the activities of Euronext Growth Advisor of the Reway Group SpA;
• It plays, or has played in the last 12 months, role of specialist financial instruments issued by Reway Group SpA;
• In the IPO phase, Integrae SIM played the role of global coordinator.

Production date: 11/03/2024 h. 6.30 pm

Publication date: 12/03/2024 h. 8.00 am

RWY IM

B R E A K I N G N E W S

BUY € 7,15

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