Slide 1: EGM Analysis – 3Q24
EGM Analysis – 3Q24 25 October 2024 Banca Profilo Research Francesca R. Sabatini – Head of Equity Research Enrico Luca, CFA – Equity Research Analyst Michele Calusa - Equity Research Analyst
Slide 2: Agenda
Agenda EGM ALL COMPANIES 2024 NEW LISTINGS 2
Slide 3: EGM 2024 Facts & Figures
EGM 2024 Facts & Figures Euronext Growth Milan is dedicated to At the end of September 2024, dynamic and competitive listed SMEs ● EGM included 208 companies (vs 197 yoy), of which 17 new listings (vs 27 seeking capital to finance growth yoy) since the beginning of the year. through a balanced regul
Slide 4: From Small to Micro caps
EGM - From Small to Micro caps At the end of September, 86% of EGM (vs 89% yoy) companies had a market capitalization below €100mln, with 53% (vs 48% yoy) falling below the €25mln threshold. A similar distribution in terms of revenue: in FY23, 87% of EGM companies reported revenue below €100mln, wit
Slide 5: Growth and profitability
EGM - Growth and profitability In 1H24, 60% of EGM (vs 72% in FY23) companies reported a yoy Revenue growth. The average revenue growth was 8% (vs 14% in FY23). 38% (vs 45% in FY23) of them showed an EBITDA margin exceeding 15%. 24 23 24 2023 50 35 46 45 42 30 30 40 27 35 25 om anies 30 22 om anies
Slide 6: Growth in M&A transactions
EGM - Growth in M&A transactions Over the past 5 years, except for the pandemic-related downturn, M&A activity has been growing steadily, setting a record in 2023 with 87 deals. In 9M24, there were 69 M&A transactions, in line with the number recorded in the first nine months last year (67). Year to
Slide 7: Best and worst performers
EGM - Best and worst performers In the last 12 months, the average performance of EGM-listed companies was negative by almost 6%. Eviso was the best performers whereas Cia Dei Caraibi showed the biggest decline. onnalisa viso ia ei araibi ro ran hetti . . . talia e hnology e s owersoft o erni o im o
Slide 8: Performance from IPO
EGM - Performance from IPO Since their IPO, over 60% of EGM companies have experienced negative performance. Among the best performers are FOPE, Adventure and Altea Green Power. 30 25 dvent re om anies ltea reen ower 20 owersoft 5 o of 0 edelfi elate h 5 viso 0 rowens a rra 000 200 0 200 400 600 800
Slide 9: Liquidity
EGM - Liquidity Liquidity remains the critical issue in the EGM. In 3Q24, 59% of companies (vs 55% yoy) traded less than 0.1% of their market capitalization. The average daily traded value was €36.3k (vs €48.5k in the last 2 ). 40 700 35 verage daily t rnover ean 36.3 35 600 30 500 om anies 24 25 40
Slide 10: Estimates cut
EGM - Estimates cut Since our last EGM report (in May) and amid disappointing 1H24 results, consensus has reduced its revenue and EBITDA expectations for 2024, 2025 and 2026. Consensus cut its FY24 revenue forecast by 14% and now e e ts, on average, €62mln from revio s €72mln or + 8 yoy from previou
Slide 11: Signs of stabilization
EGM - Signs of stabilization After reaching a record high of 11,551 in January 2022, the FTSE Italia Growth Index experienced a liquidity crisis, bottoming out at 7,594 in late October 2023. Since then, it has partially recovered and recently stabilized around 8,000 points for: (i) undemanding valua
Slide 12: Cautious optimism
EGM - Cautious optimism Since their launch in 2017, Individual Saving Plans (ordinary PIR) peaked at over €21 bn at the end of 2021, then declined to below €17 billion by the end of 2023. This decrease was due to the expiration of the 5-year tax relief on capital gains, ongoing geopolitical uncertai
Slide 13: Performance divergence among Small Cap indexes
EGM - Performance divergence among Small Cap indexes Despite similar features and market capitalization between the FTSE Italia Small and FTSE Italia Growth indexes, the latter has performed worse over the past seven years except for the already cited 2017-2021 PIR-related period. Even if the FTSE I
Slide 14: Not as bad among Euronext Growth indexes
EGM - Not as bad among Euronext Growth indexes Over the past three years, the FTSE Italia Growth index has performed (-28.3%) better than the Euronext Growth All Shares index (-38.9%). This is confirmed year to date (-2.5% vs -7.9% respectively). 0 00 90 80 70 60 50 talia rowth rone t rowth ll hare
Slide 15: Euronext Growth in Europe - Comparing market multiples
Euronext Growth in Europe - Comparing market multiples Even in terms of valuations, over the past three years the FTSE Italia Growth has showed a median EV/Sales and P/E higher than those of the Euronext Growth All-Shares. 2.5 25 2.0 20 1.5 15 1.0 10 0.5 5 0.0 0 Euronext Growth All-Share FTSE Italia
Slide 16: Index trend vs companies fundamentals
EGM - Index trend vs companies fundamentals Over the 2021-2023 period, the EGM index decline could not be explained by a worsening of om anies’ fundamentals. Recent EGM recovery can be considered as sustainable and accompanied by improving fundamentals or simply supported by liquidity measures? In 2
Slide 17: Sector market multiples
EGM - Sector market multiples As of 30 September, EGM shows a median EV/EBITDA 2024E of 6x. In sector comparison, Health Care is no longer the cheapest, leaving the place to Basic Materials. Furthermore, Consumer Staples is no longer the most expensive, being replaced by Utilities. 6.0 4.0 3.3 2.0 0
Slide 18: Sectors market multiples 1-year trend
EGM - Sectors market multiples 1-year trend In the last 12M, the median EGM EV/EBITDA 1-year forward increased from 4.7x to 6.2x. Utilities saw the largest 12M re-rating, from 6x to 7.9x, followed by Consumer Discretionary and Industrials, both up +1.6x to 5.2x and 5.1x respectively. The sole sector
Slide 19: Agenda
Agenda EGM ALL COMPANIES 2024 NEW LISTINGS 14
Slide 20: New listings by sector and market cap
EGM - New listings by sector and market cap So far this year, there have been 17 IPOs on the EGM market, down from 27 in the 9M23. Industrials remained as the dominant sector. 400 3 24 2 24 24 350 ealth tilities are 300 nergy 250 nd s trials ons mer 6 200 ta les 50 e hnology 00 2 50 0 inan ials ons
Slide 21: New listings by revenue and margin
EGM - New listings by revenue and margin 40 45 60 40 20 50 35 00 30 40 80 € mln 25 € mln 30 60 20 40 5 20 0 20 0 5 0 0 0 3 24 2 24 24 argin 2024 IPOs by 2023 sales 2024 IPOs by 2023 EBITDA and EBITDA margin Source: Bloomberg 21
Slide 22: Best performers since IPO
EGM - Best performers since IPO 830 635 630 430 93 230 30 25 22 20 5 3 0 0 9 4 4 5 0 0 0 0 2 5 3 7 0 8 Performance since IPO 22 Source: Bloomberg
Slide 23: References
References Francesca Sabatini francesca.sabatini@bancaprofilo.it Head of Equity Research Tel. +39 02 58408.461 Enrico Luca, CFA enrico.luca@bancaprofilo.it Equity Research Analyst Tel. +39 02 58408.752 Michele Calusa michele.calusa@bancaprofilo.it Equity Research Analyst Tel. +39 02 58408.784 Via Ce
Slide 24: Disclaimer
Disclaimer ANALYST’S AND BANK’S INFORMATION N N N N W N . . . (“ NK”) N N N T; FRANCESCA SABATINI IS RESPONSIBLE FOR THE DRAFTING OF THE DOCUMENT. BANCA PROFILO S.P.A. IS A BANK AUTHORISED TO PERFORM BANKING AND INVESTMENT SERVICES; IT IS PART OF BANCA PROFILO BANKING GROUP ( “ ”) N N N N -ORDINATIO