Equity | ||
Company Note | MID CORPORATE | |
Rosetti Marino | ||
Date and time of production | ||
15 October 2020: 8:02 CET |
1H20 Results
No Rating
The lockdown, with different timings and durations in Italy and abroad, affected the company's production and commercial activity, leading to revenues down by 32.4% yoy and a contained order intake in 1H20. Despite some signs of a recovery, commercial activity is still reduced and the outlook is uncertain.
1H20 results
The key take-aways from 1H20 results were: i) total revenues at EUR 111.5M vs. EUR 164.9M in 1H19A (-32.4% yoy). The Energy Segment recorded a marked drop (EUR 92M vs. EUR 143M in 1H19A); ii) EBITDA was negative for EUR 14.9M vs. a positive EUR 21.7M in 1H19A; iii) the net loss came in at EUR 17.1M vs. EUR 2.1M net profit in 1H19A; iv) the short- term net cash position was EUR 85.4M vs. EUR 120M at YE19A. The order backlog at 30 June amounted to EUR 165M (vs. EUR 246M at YE19), o/w EUR 111M in the Energy Segment, EUR 28M related to the shipbuilding activities, and EUR 26M to the Process Plants segment.
Outlook and estimates revision
Overall, given the low level of order backlog in the company's three business areas and the uncertainties in the reference markets, we revise downwards our estimates over our forecast period, as follows: i) for 2020E, we cut our revenue projections by 36%, and we now forecast a negative EBITDA (EUR -11.6M) and a reduction in net cash by 29.8%; ii) for 2021E, we cut our top/line estimate by around 19% and we now look for a positive EUR 7.1M EBITDA and net profit broadly at breakeven. In 2022E and 2023E, we see a yoy increase in turnover of around 21% and 7%, respectively, and an EBITDA margin increasing over the two-year period (at 3% in 2022E, 5.1% in 2023E), but still below the company's 2014-2019 average (around 7.3%). We highlight that any further unpredictable development of Covid-19 could undermine the feasibility of these estimates.
Valuation
In view of Rosetti Marino's stable shareholding structure and limited trading volumes, we do not assign a rating or target price to the company.
Italy/Oil Equipment & Services Update
AIM
Price Performance
(RIC: YRM.MI, BB: YRM IM)
120 |
115 |
110 |
105 |
100 |
95 |
90 |
85 |
80 |
75 |
70 |
65 |
O N D J F M A M J J A S |
Rosetti Marino FTSE IT All Sh - PRICE INDEX
Rosetti Marino - Key Data
Price date (market close) | 13/10/2020 | |||
Market price (EUR) | 35.20 | |||
Market cap (EUR M) | 140.80 | |||
52Wk range (EUR) | 40.8/35.2 | |||
Price performance % 1M | 3M | 12M | ||
Absolute | -2.2 | -2.2 | -11.1 | |
Rel. to FTSE IT All Sh | -0.9 | -0.4 | 0.2 | |
Y/E Dec (EUR M) | FY19A | FY20E | FY21E | |
Revenues | 338.6 | 254.0 | 358.0 | |
EBITDA | 33.38 | -11.60 | 7.10 | |
EBIT | 25.23 | -18.70 | -0.30 | |
Net income | 4.46 | -15.99 | 0.30 | |
EPS (EUR) | 1.12 | -4.00 | 0.08 | |
Net debt/-cash | -120.2 | -58.68 | -56.10 | |
Adj P/E (x) | 35.8 | Neg. | NM | |
EV/EBITDA (x) | 18.9 | Neg. | 12.6 | |
EV/EBIT (x) | 24.9 | Neg. | NM | |
Div ord yield (%) | 1.2 | 1.3 | 1.3 |
Source: Company data, FactSet and Intesa Sanpaolo Research estimates
Intesa Sanpaolo Research Dept.
Gabriele Berti - Research Analyst +39 02 8794 9821 gabriele.berti@intesasanpaolo.com
Arianna Terazzi - Research Analyst +39 02 8794 3187 arianna.terazzi@intesasanpaolo.com
Corporate Broking Research
Alberto Francese, Gabriele Berti
Arianna Terazzi
See page 9 for full disclosure and analyst certification | 15 October 2020: 08:04 CET |
Intesa Sanpaolo is Specialist to Rosetti Marino | |
Date and time of first circulation |
Rosetti Marino | |
Contents
Valuation | 5 |
Company Snapshot | 8 |
2 | Intesa Sanpaolo Research Department |
Rosetti Marino | |
1H20 Results
Rosetti Marino's 1H20 results were heavily impacted by Covid-19 pandemic. The key points of the results were:
- Total revenues of EUR 111.5M vs. EUR 165M in 1H19A (-32.4% yoy). This decrease in production was mainly caused by the lockdown that almost reduced to zero the operativity of the Italian companies for more than two months and, with different timings and durations, also abroad. In particular:
- The Energy segment posted revenues of EUR 92M vs. EUR 143M in 1H19A;
- Shipbuilding activities' revenues rose to EUR 4M vs. EUR 2M of 1H19A;
- The Process Plants segment posted revenues of EUR 16M (vs. EUR 20M of 1H19A).
- EBITDA was negative for EUR 14.9M vs. a positive EUR 21.7M EBITDA in 1H19A; despite cost cutting initiatives, the margin was affected by the increased weighting on revenues of service costs (60.3% vs. 38.5% in 1H19) and labour costs (26.9% vs. 19.9% in 1H19);
- Net loss came in at EUR 17.1M vs. a EUR 2.1M net profit in 1H19A.
The short-term net cash position was EUR 85.4M vs. EUR 120M at YE19A.
Rosetti Marino - 1H20A results
EUR M | 1H19A | 1H20A | yoy % | ||
Turnover | 164.9 | 111.5 | -32.4 | ||
EBITDA | 21.7 | -14.9 | NM | ||
EBITDA margin (%) | 13.1 | NM | |||
EBIT | 11.5 | -18.3 | NM | ||
EBIT margin (%) | 7 | NM | |||
Net profit | 2.1 | -17.1 | NM | ||
NM: not meaningful; A: actual; Source: Company data
The order backlog at 30 June amounted to EUR 165M (vs. EUR 246M at YE19), o/w EUR 111M in the Energy Segment, EUR 28M related to the Shipbuilding Activities, and EUR 26M to the Process Plants segment. The order acquisition in 1H20 amounted to just EUR 33M, due to the combined effect of both investment delays and cancellations (particularly in the Energy Segment) and impacted the whole group.
No cancellation of activities was seen abroad although no new contracts were signed in Kazakhstan, Nigeria and UAE.
Intesa Sanpaolo Research Department | 3 |
Rosetti Marino | |
Outlook and Estimates Revision
Low oil prices and the Covid19 pandemic impact are reducing capex volumes of oil companies and thus lowering demand for energy plants. However, in contrast with the cancellation of 2 gas platforms in the UK and a 6 months delay of another platform in the North Sea, we appreciate the company's indications that it is collecting a seizeable number of requests for new projects and the fact that, in 2021, new tender procedures should enter the award phase.
According to management, overall there are encouraging signs of recovery in some countries overlooking the Mediterranean Sea and the Arabian Gulf as well as positive feedback from the Russian market, but operativity is subject to the duration and the geographic spread of the health emergency.
On the other hand, management indicated that shipbuilding activities (2% and 3.6% of business turnover in FY19 and 1H20, respectively) are expected to continue with no particular issues.
Estimates revision
Overall, given the low level of order backlog in the company's three business areas and the uncertainties in the reference markets, we revise downwards our estimates over our forecast period, extending our projections to FY22 and FY23. In detail:
- For 2020E, we cut our revenues projections by around 36%, and we now assume a negative EBITDA (EUR -11.6M) and a reduction in net cash by 29.8%;
- For 2021E, we reduced by around 19% our top line assumption, now looking for a EUR 7.1M positive EBITDA and net profit broadly at breakeven;
- For 2022E and 2023E, we projected a yoy turnover increase of around 21% and 7%, respectively, and an EBITDA margin increasing in the two-year period (3% in 2022E, 5.1% in 2023), but still at a lower level vs. the company's 2014-2019 average (around 7.3%).
We highlight that any further unpredictable development of Covid19 could undermine the feasibility of these estimates.
Rosetti Marino - Estimates revision (2020E-23E)
EUR M | 2020E | 2021E | 2022E | 2023E | ||||||||
Old | chg. % | Old | chg. % | yoy % | yoy % | |||||||
New | New | New | New | |||||||||
Revenues | 398.5 | 254.0 | -36.3 | 440.4 | 358.0 | -18.7 | 434.0 | 21.2 | 465.0 | 7.1 | ||
EBITDA | 14.7 | -11.6 | NM | 20.4 | 7.1 | -65.1 | 13.2 | 85.9 | 23.5 | 78.0 | ||
EBITDA margin (%) | 3.7 | NM | 4.6 | 2.0 | 3.0 | 5.1 | ||||||
EBIT | 8.6 | -18.7 | NM | 14.2 | -0.3 | NM | 5.8 | NM | 16.1 | 176.7 | ||
Net profit | 3.1 | -16.0 | NM | 7.0 | 0.3 | -95.7 | 4.0 | NM | 10.9 | 171.3 | ||
Net debt (- cash) | -85.0 | -58.7 | -30.9 | -87.2 | -56.1 | -35.7 | -58.6 | 4.5 | -66.3 | 13.0 | ||
NM: not meaningful; E: estimates; Source: Intesa Sanpaolo Research
4 | Intesa Sanpaolo Research Department |
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Rosetti Marino S.p.A. published this content on 15 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 October 2020 09:04:03 UTC