Major Estimate Revision • Oct 29
Consensus EPS estimates fall by 77% The consensus outlook for earnings per share (EPS) in fiscal year 2024 has deteriorated. 2024 revenue forecast decreased from €100.6m to €91.9m. EPS estimate also fell from €0.215 per share to €0.05 per share. Net income forecast to grow 274% next year vs 68% growth forecast for Software industry in Italy. Consensus price target down from €4.06 to €3.52. Share price was steady at €2.53 over the past week. Price Target Changed • Oct 28
Price target decreased by 15% to €3.52 Down from €4.15, the current price target is an average from 2 analysts. New target price is 39% above last closing price of €2.53. The company is forecast to post earnings per share of €0.23 for next year compared to €0.084 last year. Reported Earnings • Sep 30
First half 2024 earnings released First half 2024 results: Revenue: €48.5m (down 3.4% from 1H 2023). Net income: €958.8k (down 67% from 1H 2023). Profit margin: 2.0% (down from 5.8% in 1H 2023). Revenue is forecast to grow 10% p.a. on average during the next 3 years, compared to a 12% growth forecast for the Software industry in Italy. New Risk • Sep 27
New minor risk - Profit margin trend The company's profit margins are lower than last year and have reduced by more than 30%. Net profit margin: 1.7% Last year net profit margin: 4.2% This is considered a minor risk. A large drop in profit margin could indicate the company does not have strong competitive advantages or it is yet to establish itself and its core business. Even if it is a well established business, this may make it a much riskier investment than one that has a combination of proven competitive advantages and a stable or growing profit margin. Currently, the following risks have been identified for the company: Major Risk Debt is not well covered by operating cash flow (currently running at an operating cash loss). Minor Risk Profit margins are more than 30% lower than last year (1.7% net profit margin). Major Estimate Revision • Apr 24
Consensus EPS estimates fall by 18% The consensus outlook for fiscal year 2024 has been updated. 2024 EPS estimate fell from €0.245 to €0.20. Revenue forecast unchanged from €100.6m at last update. Net income forecast to grow 142% next year vs 60% growth forecast for Software industry in Italy. Consensus price target of €4.06 unchanged from last update. Share price was steady at €1.99 over the past week. Announcement • Apr 19
Relatech S.p.A. (BIT:RLT) completed the acquisition of Dialog Sistemi Srl from Francesco Fantuzzi and others. Relatech S.p.A. (BIT:RLT) signed a binding agreement to acquire Dialog Sistemi Srl from Francesco Fantuzzi and others on May 13, 2021. The acquisition will occur in two tranches of 60% and 40%. The operation, aimed at the acquisition of 100% of the capital to be carried out in two tranches, provides for a consideration of approximately €0.67 million for 60% of the capital. On May 21, 2021, Relatech announces the closing of the acquisition of 60% of the share capital of Dialog Sistemi S.r.l. This sum will be paid, upon the occurrence of specific conditions precedent, in cash for approximately €0.44 million and through an in-kind component through the sale of a total of no. 73,134 Relatech treasury shares conventionally valued at an amount of €3.20 each. Following the approval of the financial statements at December 31, 2022 of Dialog a further sum will be paid by Relatech in favor of the selling shareholders equal to a total of €0.25 million, increased by the yield of 3.75% on an annual basis, with effect from the closing of the first tranche and until completion of the closing relating to the second tranche. The remaining 40% will be acquired by 2024 for a consideration that will be determined by applying specific formulas based, inter alia, on the EBITDA and NFP values of Dialog. As of December 31, 2021 Dialog Sistemi Srl repoerted sales revenues of approximately €1.12 million with an EBITDA of approximately €0.15 million. As on May 21, 2021, Relatech S.p.A. (BIT:RLT) acquired 60% stake in Dialog Sistemi Srl from Francesco Fantuzzi and others. Luca Marco Bizzozero of Ballabio Studio and Giovanni Prearo of Prearo – Esposito acted as legal advisors to Dialog Sistemi s.r.l. Silvia Bordi and Alessandro Merenda of Gianni, Origoni, Grippo, Cappelli & Partners acted as legal advisors to Relatech S.p.A.Relatech S.p.A. (BIT:RLT) completed the acquisition of Dialog Sistemi Srl from Francesco Fantuzzi and others on April 18, 2024. This is to acquire remaining 40% of the share capital of Dialog Sistemi S.r.l The total consideration - determined by applying specific formulas based on Dialog Sistemi's EBITDA and NFP values as of December 31, 2023 is of €1.153 million fully paid today to the previous minority shareholders, Alessandro Greco, Adriano Giovanni Caffarri and Dialog S.r.l. Management Consulting & Business Management Systems. Finally, by virtue of the previously signed agreements, within 30 days from today's date Relatech will be required to pay in cash in favor of the first selling shareholders - as a deferred price for the purchase of 60% of Dialog Sistemi's share capital - the amount of €0.245 million Euros increased by the yield of 3.75% on an annual basis with effect from May 21, 2021 (i.e., the date of the "first closing") until the date of actual payment. New Risk • Mar 31
New major risk - Financial position The company's debt is not well covered by operating cash flow. Operating cash flow to total debt ratio: 7.5% This is considered a major risk. If the company's operating cash flows are too small relative to the size of their debt, it increases their balance sheet risk. The company has less cash from operations to cover its expenses from servicing large debt and it increases the risk of liquidity issues. It also extends the time it would take for the company to pay back the debt in full, meaning it may not be able to easily pay it all off in a distress scenario. Currently, the following risks have been identified for the company: Major Risk Debt is not well covered by operating cash flow (7.5% operating cash flow to total debt). Minor Risk Market cap is less than US$100m (€88.7m market cap, or US$95.7m). Major Estimate Revision • Dec 06
Consensus EPS estimates fall by 13% The consensus outlook for earnings per share (EPS) in fiscal year 2023 has deteriorated. 2023 revenue forecast decreased from €104.3m to €100.0m. EPS estimate also fell from €0.18 per share to €0.156 per share. Net income forecast to grow 127% next year vs 52% growth forecast for Software industry in Italy. Consensus price target down from €4.30 to €4.15. Share price rose 6.5% to €2.30 over the past week. Price Target Changed • Oct 26
Price target decreased by 11% to €4.30 Down from €4.83, the current price target is an average from 2 analysts. New target price is 119% above last closing price of €1.97. Stock is down 13% over the past year. The company is forecast to post earnings per share of €0.18 for next year compared to €0.041 last year. New Risk • Jul 23
New minor risk - Market cap size The company's market capitalization is less than US$100m. Market cap: €89.1m (US$99.2m) This is considered a minor risk. Companies with a small market capitalization are most likely businesses that have not yet released a product to market or are simply a very small company without a wide reach. Either way, risk is elevated with these companies because there is a chance the product may not come to fruition or the company's addressable market or demand may not be as large as expected. In addition, if the company's size is the main factor, it is less likely to have many investors and analysts following it and scrutinizing its performance and outlook. Currently, the following risks have been identified for the company: Major Risk High level of non-cash earnings (56% accrual ratio). Minor Risks Profit margins are more than 30% lower than last year (2.5% net profit margin). Shareholders have been diluted in the past year (14% increase in shares outstanding). Market cap is less than US$100m (€89.1m market cap, or US$99.2m). Price Target Changed • May 31
Price target increased by 13% to €5.26 Up from €4.65, the current price target is an average from 2 analysts. New target price is 137% above last closing price of €2.22. Stock is down 7.7% over the past year. The company is forecast to post earnings per share of €0.23 for next year compared to €0.041 last year. Price Target Changed • Apr 18
Price target increased by 9.8% to €4.83 Up from €4.40, the current price target is an average from 2 analysts. New target price is 124% above last closing price of €2.16. Stock is down 6.1% over the past year. The company is forecast to post earnings per share of €0.23 for next year compared to €0.041 last year. Major Estimate Revision • Dec 15
Consensus forecasts updated The consensus outlook for 2022 has been updated. 2022 revenue forecast increased from €76.1m to €96.3m. EPS estimate fell from €0.13 to €0.10. Net income forecast to grow 346% next year vs 81% growth forecast for Software industry in Italy. Consensus price target up from €4.40 to €4.65. Share price was steady at €2.21 over the past week. Price Target Changed • Dec 14
Price target increased to €4.65 Up from €4.31, the current price target is an average from 2 analysts. New target price is 107% above last closing price of €2.25. Stock is down 12% over the past year. The company is forecast to post earnings per share of €0.13 for next year compared to €0.11 last year. Board Change • Nov 16
Less than half of directors are independent Following the recent departure of a director, there are only 2 independent directors on the board. The company's board is composed of: 2 independent directors. 3 non-independent directors. VP & Independent Director Gianni Papa was the last independent director to join the board, commencing their role in 2020. The company's minority of independent directors is a risk according to the Simply Wall St Risk Model. Major Estimate Revision • Oct 18
Consensus forecasts updated The consensus outlook for 2022 has been updated. 2022 revenue forecast increased from €61.6m to €76.1m. EPS estimate fell from €0.14 to €0.13. Net income forecast to grow 229% next year vs 94% growth forecast for Software industry in Italy. Consensus price target of €4.40 unchanged from last update. Share price rose 7.4% to €2.18 over the past week. Reported Earnings • Sep 28
First half 2022 earnings released: EPS: €0.03 (vs €0.077 in 1H 2021) First half 2022 results: EPS: €0.03 (down from €0.077 in 1H 2021). Revenue: €28.4m (up 105% from 1H 2021). Net income: €807.3k (down 68% from 1H 2021). Profit margin: 2.8% (down from 18% in 1H 2021). The decrease in margin was driven by higher expenses. Revenue is forecast to grow 19% p.a. on average during the next 3 years, compared to a 19% growth forecast for the Software industry in Italy. Over the last 3 years on average, earnings per share has fallen by 1% per year but the company’s share price has increased by 37% per year, which means it is well ahead of earnings. Valuation Update With 7 Day Price Move • Jul 27
Investor sentiment improved over the past week After last week's 16% share price gain to €2.30, the stock trades at a forward P/E ratio of 16x. Average forward P/E is 20x in the Software industry in Italy. Total returns to shareholders of 309% over the past three years. Board Change • Apr 27
Less than half of directors are independent Following the recent departure of a director, there are only 2 independent directors on the board. The company's board is composed of: 2 independent directors. 3 non-independent directors. Executive VP & Independent Director Gianni Papa was the last independent director to join the board, commencing their role in 2020. The company's minority of independent directors is a risk according to the Simply Wall St Risk Model. Reported Earnings • Apr 18
Full year 2021 earnings: EPS misses analyst expectations Full year 2021 results: EPS: €0.10 (up from €0.083 in FY 2020). Revenue: €32.9m (up 40% from FY 2020). Net income: €3.65m (up 43% from FY 2020). Profit margin: 11% (in line with FY 2020). Revenue was in line with analyst estimates. Earnings per share (EPS) missed analyst estimates by 33%. Over the next year, revenue is forecast to grow 39%, compared to a 52% growth forecast for the industry in Italy. Valuation Update With 7 Day Price Move • Mar 04
Investor sentiment deteriorated over the past week After last week's 16% share price decline to €2.04, the stock trades at a forward P/E ratio of 15x. Average forward P/E is 26x in the Software industry in Italy. Total loss to shareholders of 27% over the past year. Price Target Changed • Oct 12
Price target increased to €4.36 Up from €4.06, the current price target is an average from 2 analysts. New target price is 61% above last closing price of €2.70. Stock is up 32% over the past year. Reported Earnings • Sep 26
First half 2021 earnings released: EPS €0.077 (vs €0.037 in 1H 2020) The company reported a strong first half result with improved earnings, revenues and profit margins. First half 2021 results: Revenue: €13.9m (up 32% from 1H 2020). Net income: €2.48m (up 108% from 1H 2020). Profit margin: 18% (up from 11% in 1H 2020). The increase in margin was driven by higher revenue. Price Target Changed • Jul 22
Price target increased to €4.31 Up from €3.97, the current price target is an average from 2 analysts. New target price is 55% above last closing price of €2.77. Stock is up 41% over the past year. Major Estimate Revision • Jul 08
Consensus forecasts updated The consensus outlook for 2021 has been updated. 2021 revenue forecast increased from €31.6m to €34.9m. EPS estimate unchanged from €0.11 at last update. Software industry in Italy expected to see average net income growth of 35% next year. Consensus price target up from €3.97 to €4.06. Share price rose 5.2% to €2.65 over the past week. Price Target Changed • Apr 16
Price target increased to €3.97 Up from €3.64, the current price target is an average from 2 analysts. New target price is 44% above last closing price of €2.75. Stock is up 59% over the past year. Reported Earnings • Mar 26
Full year 2020 earnings released The company reported a mediocre full year result with weaker profit margins, although earnings were flat and revenues improved. Full year 2020 results: Revenue: €24.0m (up 16% from FY 2019). Net income: €2.55m (flat on FY 2019). Profit margin: 11% (down from 12% in FY 2019). The decrease in margin was driven by higher expenses. Valuation Update With 7 Day Price Move • Jan 21
Investor sentiment improved over the past week After last week's 17% share price gain to €8.04, the stock is trading at a trailing P/E ratio of 28.4x, up from the previous P/E ratio of 24.4x. This compares to an average P/E of 27x in the Software industry in Italy. Total returns to shareholders over the past year are 190%. Is New 90 Day High Low • Jan 19
New 90-day high: €7.60 The company is up 29% from its price of €5.90 on 21 October 2020. The Italian market is up 13% over the last 90 days, indicating the company outperformed over that time. It also outperformed the Software industry, which is up 22% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is €11.36 per share. Valuation Update With 7 Day Price Move • Dec 29
Investor sentiment improved over the past week After last week's 22% share price gain to €7.48, the stock is trading at a trailing P/E ratio of 26.4x, up from the previous P/E ratio of 21.6x. This compares to an average P/E of 19x in the Software industry in Italy. Total returns to shareholders over the past year are 226%. Is New 90 Day High Low • Dec 23
New 90-day high: €6.48 The company is up 9.0% from its price of €5.94 on 24 September 2020. The Italian market is up 12% over the last 90 days, indicating the company underperformed over that time. It also underperformed the Software industry, which is up 17% over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is €11.09 per share. Is New 90 Day High Low • Oct 01
New 90-day high: €6.08 The company is up 2.0% from its price of €5.96 on 03 July 2020. The Italian market is down 4.0% over the last 90 days, indicating the company outperformed over that time. It also outperformed the Software industry, which is flat over the same period. According to the Simply Wall St valuation model, the estimated intrinsic value of the company is €9.32 per share. Reported Earnings • Sep 27
First half earnings released Over the last 12 months the company has reported total profits of €2.97m, up 134% from the prior year. Total revenue was €21.0m over the last 12 months, up 34% from the prior year. Announcement • Jul 30
Relatech S.p.A. (BIT:RLT) acquired 26.5% stake in Xonne Srl for €0.12 million Relatech S.p.A. (BIT:RLT) acquired 26.5% stake in Xonne Srl for €0.12 million on July 20, 2020. Under the terms of consideration, Relatech will issue 20,000 shares and will accrue an earn-out to be determined on the basis of the achievement of certain Xonne performance parameters in the years up to 2022. In addition, the sellers undertake to respect a non-compete agreement lasting 5 years from the closing date. In related transaction, Relatech S.p.A. acquired 27% stake in Xonne Srl for €0.16 million on July 20, 2020 by share capital increase through cash payment. For year ended December 31, 2019, Xonne had revenue of €0.71 million. Management continuity in Xonne is guaranteed by maintaining the position of a Chief Executive officer currently in office. Thymos Business & Consulting S.R.L. assisted Relatech as adviser in the transaction and BPER Banca S.p.A. (BIT:BPE) acted as financial advisor to Relatech S.p.A. in transaction.
Relatech S.p.A. (BIT:RLT) completed the acquisition of 26.5% stake in Xonne Srl on July 20, 2020