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Megatrends feed long-term growth prospects...
Yesterday LU-VE hosted an Investor Day, shedding light on the megatrends that are likely to support the group''s growth ambitions. We discussed these dynamics in our latest in depth note (LU-VE: Cold Rush). Growth and increasing sustainability in cold chain and heating electrification are the main factors supporting LU-VE''s organic development in the near future. By region, the EU remains at the core as it is benefitting from the increasing penetrat
Companies: LUVE (LUVE:BIT)LU-VE SpA (LUVE:MIL)
BNP Paribas Exane - Sponsored Research
Elections confirm polls, with the right-wing coalition winning a majority of seats
The Italian elections resulted in the right-wing coalition led by Giorgia Meloni of the Brothers of Italy winning a majority of seats in both lower and upper chambers, though far from the 2/3 needed to change the constitution. The new government will officially start in the week of Oct 10th, and after an initial phase of selecting ministers, it can begin effectively governing from early November. Thus, we may nee
Companies: CEM CEM MN MN SAB SAB IRE IRE IGD IGD IF IF HER HER FNM FNM TIP TIP SES SES UNIR LUVE LUVE ILTY GHC WIIT COM SCF ORS AIW
H1 22 results showed strong profitability
In H1 22 sales grew by +39.9% YoY with organic figure of c.36% (BNPPe) which was the result of c.25% increase of the price list, while the rest came from volume/mix. Profitability was well ahead of our number. LU-VE posted 13.2% EBITDA margin (vs BNPPe of 12%), implying EUR 42.1m of EBITDA (+c.59% YoY) which was 12% above our estimate. Pricing power continues to protect profitability with the positive impact of the price hikes and volumes, more than offs
Though macro fears are looming, we also find opportunities. Of the 18 stocks we cover under Sponsored Research (SR) agreements, we have selected four companies to navigate the next few months: LU-VE, Orsero, Hera and Sesa, offering a combination of structural growth, no/low gas/energy risk, cheap valuation, upside to consensus and specific catalysts (MandA or self-help).
Gas price is the key issue in Italy - screenings
With natural gas and electricity prices being the biggest concern impairing
Companies: HER SES LUVE ORS
LU-VE benefits from two long-lasting trends, namely the development of a stronger, more sustainable cold chain and booming heat pumps. These two combined forces have pushed its growth above other component makers (e.g. CAREL, BELIMO) and should support further rerating.
Earnings momentum remains strong: 2022-24e adj. EPS up by c.14%
The growth story is far from cooling and our analysis suggests that demand is accelerating across LU-VE''s end-markets. In this note, we take the opportunity to refr
Companies: LU-VE SpA
Strong margins in H2 21, even if cash generation suffered from inventory build-up
In Q4 21, organic sales growth was close to 30% (already disclosed in January). In H2 21, EBITDA margin strongly expanded to 13% (vs 11.3% in H2 20) despite higher selling prices almost completely offsetting the higher sourcing costs (''only'' EUR0.5m net negative impact at EBITDA level). In H2 21 LU-VE reported a c. 14% price increase. Net debt was EUR122m, slightly higher than previously expected (EUR101m) due t
H1 results show very strong organic growth and margin expansion
LUVE posted 19.4% organic sales growth (16.8% reported), of which 15.4% was volume growth and 4% was driven by price hikes reaching a level 5% above H1 19 on an organic basis. Growth was driven by the BU Components with +29% while Cooling systems grew by +6%. Refrigeration grew by 26% and special applications by 35%, while air conditioning was flat and industrial cooling declined by -18%, impacted by slowing ''district heating'' pr
Q1 21 sales were solid and the backlog mirrors an underlying acceleration ahead
LU-VE reported last week that sales of products increased by +4.2% YoY in Q1 2021 (in Q1 20 organic growth was flat, thus representing a tough basis of comparison due to a very strong Jan-Feb 2020). More importantly the backlog was up +12.3% YoY (in Q1 20 it grew organic by c. 19% YoY) and reached a new high of EUR99.5m. This may be due to the recovery of underlying demand and the increasing orders received by the c
Good FCF and EBITDA in 2020 even if DandA expenses were slightly higher than expected
LU-VE had previously reported an organic sales decline of -2.4% for FY20. The reporting of full PandL showed a good adjusted EBITDA margin (11.4% vs. 11.1% expected). However higher DandA than previously expected led to an adj. operating margin slightly weaker than expected (3.9% vs 4.2%e). A strong NWC management allowed net debt to reduce from EUR126.2m in H1 20 to EUR106.8m (vs EUR111m expected). DPS will b
It''s a European leader in refrigeration and AC equipment and components and well positioned to expand geographically, build up margins and ride green regulation through the coming decade.
Finding the right niche
LU-VE has 17%/18% share in the heat exchanger and air cooling equipment markets in Europe. These are niche high-value-added segments (8% of total volumes) with faster-than-average market growth. After -10% organic decline in 2020e, we expect c. 8% sales growth in 2020-24.
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Forecast and target price update
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XPD has a new management team, only recently appointed. They have a full plate, including fixing underperforming UK warehousing and freight forwarding units, cutting overheads, and improving management of working capital to reduce debt. But there are also some gems in the Group, the core Central & Eastern European (CEE) logistics operations continue to perform strongly despite the turbulence of the War in Ukraine. Hence H1 earnings show a mixed picture with Group revenue up nearly 50% to £189.3m
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Invinity announced results for 1H22 to June including a net loss of £11.6m with cash at £16.1m. Results will be weighted to 2H22 as vanadium flow batteries (VFBs) for the Elemental and Yadlamalka projects are shipped. The Base order book doubled and Invinity is focused on closing late-stage commercial deals by YE22. Good progress is being made on the next-generation VFB with Gamesa, now named Mistral. The business case for VFBs is improving as EV demand for lithium-ion batteries squeezes availab
Companies: Invinity Energy Systems PLC
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Heads of Terms toward Sale of Deeside Project
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Directa Plus has reported its interim results, which have been well trailed. Revenues increased by 39%, while EBITDA losses were contained to €1.3m (PY: €0.9m). The robust sales performance can be attributed to mgmt.’s proven ability to convert commercial opportunities as the interest in graphene continues to grow. This prompts us to leave our revenue growth forecasts unchanged, noting the significant upside potential should the DCTA win the Setcar contract. The challenging environment/inflation
Companies: Directa Plus Plc
Singer Capital Markets
Despite ongoing supply chain disruption, the Group has reported results in-line with expectation. Adjusted EBITDA from continuing operations improved slightly to £12.7m with the Energy divisions growing by c.15%. Increased investment in the Medical division and the pivot away from 3rd party component manufacture resulted in an offsetting c.£1.5m EBITDA movement. The Group enters FY2023 with a robust order book that already provides 90% coverage for FY23E and 45% for FY24E. Our EBITDA forecasts r
Companies: Avingtrans plc
Water Intelligence reported a strong increase in revenues for 1H22 but that did not translate into profits which were held back by a sharp increase in other administrative costs. We understand that cost trajectory should flatten in 2H22 which, together with an increase in our revenue forecasts, means we maintain our EPS forecasts. The revenue performance underscores the strength of the growth story but given current market conditions and the need for Water Intelligence to demonstrate bottom line
Companies: Water Intelligence plc
MeyGen tidal turbine redeployment
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EQTEC continues to deliver on its strategy of realising value from its development projects and focusing on the delivery of its proprietary gasification technology. The agreement to sell Deeside for £15m represents value in our view and adjusting our forecasts for the transaction raises our central case valuation to 3.4p from 3.2p.
Invinity’s interim results show the company moving forward whilst executing on a sizeable delivery backlog and also focusing on near term opportunities. We see a macro outlook that is increasingly supportive of long duration storage technologies that can be deployed easily and rapidly to deliver energy security in decarbonising grids. In this environment Invinity’s relationships with US Vanadium and the potential embodied within Project Mistral are encouraging.