Equity Company Note | ||
MID CORPORATE | ||
Rosetti Marino | ||
17 April 2019: 12:21 CET | ||
Date and time of production | ||
FY18A Results | ||
No Rating |
Rosetti Marino - Key estimates and data | ||||
Y/E December | 2018A | 2019E | 2020E | |
Revenues | EUR M | 260.5 | 377.1 | 381.7 |
EBITDA | EUR M | 28.50 | 14.34 | 16.03 |
EBIT | EUR M | 17.49 | 8.35 | 10.53 |
Net Income | EUR M | 5.54 | 5.66 | 7.52 |
Dividend ord. | EUR | 0.70 | 0.70 | 0.70 |
Adj. EPS | EUR | 1.39 | 1.42 | 1.88 |
EV/EBITDA | x | 0.81 | 4.2 | 3.7 |
Adj. P/E | x | 27.3 | 28.4 | 21.4 |
A: actual; E: estimates; Source: Company data and Intesa Sanpaolo Research
FY18A results. Consolidated revenues were EUR 260.5M, up by around 26% yoy. The increase was mainly driven by the Energy activities which posted revenues of around EUR 229M vs. EUR 168M in FY17A, while the Process Plant segment reported revenues of EUR 32M vs. EUR 36M in FY17A. Shipbuilding activities did not contribute to FY18A revenues, as the company acquired the first order of a superyacht at the end of the year. EBITDA was EUR 28.5M vs. EUR 6.4M in FY17A, with a margin of 10.9%. The increase was mainly due to the economies of scale obtained as a result of the growth in sales volumes. Net profit came in at EUR 5.5M vs. a loss of EUR 5.8M in FY17A. The (short-term) net cash position stood at EUR 128M vs. EUR 61.2M at YE17A. During 2018, investments in intangible assets were EUR 0.6M and investments in tangible assets EUR 6.1M.
Italy/Oil Equipment &
Services
Company Update
Intesa Sanpaolo Research Department
Gabriele Berti Research Analyst +39 02 8794 9821
gabriele.berti@intesasanpaolo.com
Sebastiano Grisetti
Research Analyst
+39 02 8794 3187
sebastiano.grisetti@intesasanpaolo.com
Corporate Broking Research
Alberto Francese
Gabriele Berti
Sebastiano Grisetti
Outlook. The recovery of the Oil & Gas market allowed Rosetti to acquire a significant order book at the end of 2018. The Energy division order backlog amounted to EUR 387M (vs. EUR 373M at YE17), the Process Plant segment orders were EUR 16M, equal to that of YE17, and lastly the order backlog of shipbuilding activities amounted to EUR 9M (vs. a zero backlog at YE17). For the Oil & Gas platforms, FY18 was characterised by an intense activity in the design and management of contracts for North Sea projects, which should continue throughout 2019, when the bulk of supplies and construction should be developed. The projects acquired in the previous years should lead to increasing volumes in 2019, resulting from construction activities carried out at the Piomboni Shipyard in Marina di Ravenna, but also in Qatar, Kazakhstan, Egypt and Nigeria. With regards to shipbuilding activities, management is seeing a growing demand for information and offers from dealers, global brokers, designers and naval architecture firms and also foresees the possibility of an entry into the US market. In the Processing Plant segment, together with the renewed commercial campaign, the review of the processes and the new business development strategies, the group is striving to optimise production costs, reduce execution times and the weighting of structural costs. All the above should allow Rosetti to recover margins and effectiveness so as to improve its market position and competitiveness.
Estimates and valuation. Based on FY18A results and management's outlook we slightly revised upwards our top-line projections, while we decreased profitability levels. For 2019E in particular, we raised our top-line estimate by around 7.9% vs. our previous assumptions, while we reduced our FY19E EBITDA by around 2.4%, implying an EBITDA margin of 3.8% vs. 4.2% previously. Our FY19E bottom line now stands at around EUR 5.7M vs. EUR 6.9M previously. We project a positive short-term cash position of about EUR 101M in 2019E. 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.
Key risks. The global economic performance and oil price could affect the company's future results. We also believe that the small size of the company, compared to that of its peers, could be a risk in the presence of competitive pressure.
Price performance, -1Y
16/04/2019
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75 A M J J A S O N D J F M A
Rosetti Marino FTSE IT All Sh - PRICE INDEX
Source: FactSet
Date and time of first circulation:
17 April 2019: 13:00 CET
AIM
Priced at market close on 16/04/2019*
Market price (€) | 40.20 | |
52Wk range (€) | 41.8/35.0 | |
Market cap (€ M) | 160.80 | |
No. of shares | 4.00 | |
Free float (%) | 0.2 | |
Major shr | Rosfin | |
(%) | 56.0 | |
Reuters | YRM.MI | |
Bloomberg | YRM IM | |
FTSE IT All Sh | 23981 | |
Performance % | ||
Absolute | Rel. to FTSE IT All | |
-1M | 0.5 -1M | -3.3 |
-3M | -1.5-3M | -12.1 |
-12M | 12.6 -12M | 20.0 |
*unless otherwise indicated within report. Source: FactSet and Intesa Sanpaolo Research estimates
See page 9 for full disclosures and analyst certification Banca IMI is Specialist to Rosetti Marino
Rosetti Marino
17 April 2019
Contents
DCF model | 6 |
2 | Intesa Sanpaolo Research Department |
FY18A Results
In FY18A, Rosetti Marino posted the following key items:
Total revenues of EUR 260.5M in FY18A vs. EUR 207.2M in FY17A. The increase was mainly driven by the Energy activities, which posted revenues of around EUR 229M vs. EUR 168M in FY17A, while the Process Plant segment reported revenues of EUR 32M vs. EUR 36M in FY17A. Shipbuilding activities did not contribute to FY18A revenues;
Rosetti Marino - FY18A results | ||||||
EUR M | FY17A | FY18A | yoy % | FY18E | A/E % | |
Turnover | 207.2 | 260.5 | 25.8 | 286.2 | -9.0 | |
EBITDA | 6.4 | 28.5 | NM | 5.6 | NM | |
EBITDA margin (%) | 3.1 | 10.9 | 2.0 | |||
EBIT | -2.2 | 17.5 | NM | 0.6 | NM | |
EBIT margin (%) | -1.0 | 6.7 | ||||
Net Profit | -5.8 | 5.5 | NM | 0.0 | NM | |
Net Debt/(Cash) | -61.2 | -128.0 | 109.0 | -55.2 | NM |
NM: not meaningful; A: actual; E: estimates; Source: Company data and Intesa Sanpaolo Research
On a divisional basis, the group reported the following performances:
The Energy division, with a turnover of approximately EUR 229M (EUR 168M in FY17), has been confirmed as the main sector in which the group operates. Regarding Oil & Gas platforms, the year was characterised by intense planning and management activities for projects destined for the North Sea. The construction of Living Quarters in Qatar has started, and works will continue throughout 2019. On the Kazakh front, Rosetti continued to follow an important project acquired in 2017 and two minor projects acquired during 2018, that will also have operational queues in 2019. Two Subsea projects and one Onshore project have been concluded. Lastly, in 2H18 the group started operations in Nigeria (Brownfield type operations).
The Shipbuilding activities posted zero revenues in FY18 (EUR 3M in FY17), but at the end of the year the group successfully acquired its first order of a superyacht. According to management, there has been an ever-increasing market interest in explorer and supply vessels.
The Process Plant segment reported revenues of EUR 32M vs. EUR 36M in FY17. In this regard, it should be noted that although the group posted lower volumes, there was a significant improvement in margins. This sector, after suffering in prior years due to a poorly effective commercial policy, showed signs of a recovery in order acquisitions, especially towards the end of the year.
Rosetti Marino - Revenues breakdown by business unit | ||||
EUR M | FY17A | FY18A | yoy % | |
Energy | 168 | 229 | 36 | |
Process Plants | 36 | 32 | -11 | |
Shipbuilding | 3 | 0 | -100 | |
Total Revenue | 207 | 261 | 26 |
Source: Company data
EBITDA was EUR 28.5M vs. EUR 6.4M in FY17A, with a margin of 10.9%. The increase was mainly due to the economies of scale obtained as a result of the growth in sales volumes;
Net profit came in at EUR 5.5M vs. a loss of EUR 5.8M in FY17A;
The short-term net cash position stood at EUR 128M vs. EUR 61.2M at YE17A;
During 2018, investments in intangible assets came to EUR 0.6M and investments in tangible assets were EUR 6.1M;
Lastly, we highlight that the BoD will propose a dividend of EUR 0.70/share for 2018 at the shareholders' meeting.
Intesa Sanpaolo Research Department
Rosetti Marino
17 April 2019
3
Rosetti Marino
17 April 2019
Earnings Outlook
The recovery of the Oil & Gas market allowed Rosetti to acquire a significant order book at the end of 2018. The Energy division order backlog amounted to EUR 387M (vs. EUR 373M at YE17), the Process Plant segment orders were EUR 16M, equal to that of YE17, and lastly the order backlog of shipbuilding activities amounted to EUR 9M (vs. a zero backlog at YE17).
For the Oil & Gas platforms, FY18 was characterised by an intense activity in the design and management of contracts for North Sea projects, which should continue throughout 2019, when the bulk of supplies and construction should be developed. The projects acquired in the previous years should lead to increasing volumes in 2019, resulting from construction activities carried out at the Piomboni Shipyard in Marina di Ravenna, but also in Qatar, Kazakhstan, Egypt and Nigeria.
With regards to shipbuilding activities, management is seeing a growing demand for information and offers from dealers, global brokers, designers and naval architecture firms and also foresees the possibility of an entry into the US market.
In the Processing Plant segment, together with the renewed commercial campaign, the review of the processes and the new business development strategies, the group is striving to optimise production costs, reduce execution times and the weighting of structural costs. All the above should allow Rosetti to recover margins and effectiveness so as to improve its market position and competitiveness.
Estimates Revision
Based on FY18A results and management's outlook we slightly revised upwards our top-line projections, while we decreased profitability levels. For 2019E in particular, we raised our top- line estimate by around 7.9% vs. our previous assumptions, while we reduced our FY19E EBITDA by around 2.4%, implying an EBITDA margin of 3.8% vs. 4.2% previously, due to a less profitable expected sales mix. Our FY19E bottom line now stands at around EUR 5.7M vs. EUR 6.9M previously. We project a positive short term cash position of about EUR 101M in 2019E.
Rosetti Marino - 2019E-20E estimates revision | |||||||
EUR M | 2019E | 2020E | |||||
Old | New | chg. % | Old | New | chg. % | ||
Revenues | 349.4 | 377.1 | 7.9 | 377.7 | 381.7 | 1.1 | |
EBITDA | 14.7 | 14.3 | -2.4 | 25.7 | 16.0 | -37.6 | |
EBITDA margin (%) | 4.2 | 3.8 | 6.8 | 4.2 | |||
EBIT | 9.4 | 8.4 | -11.1 | 20.2 | 10.5 | -47.9 | |
Net profit | 6.9 | 5.7 | -17.9 | 14.8 | 7.5 | -49.2 | |
Net debt (-cash) | -50.6 | -101.1 | -59.8 | -101.7 |
Source: Intesa Sanpaolo Research estimates
4 | Intesa Sanpaolo Research Department |
Rosetti Marino
17 April 2019
Valuation
We based our valuation of Rosetti Marino on a multiples comparison and DCF model.
Multiples comparison
In our multiples comparison, we identified a sample of comparable companies as reported in the following tables.
We highlight that the profitability of Rosetti Marino, in terms of EBIT margin and net income margin, is below the peers' average.
Rosetti Marino - 2017E-18E margins comparison | |||||
Mkt cap | EBIT margin | EBIT margin | Net income | Net income | |
margin | margin | ||||
(EUR M)** | FY19E % | FY20E % | |||
FY19E % | FY20E % | ||||
Saipem | 4,646 | 10.8 | 11.5 | 1.5 | 2.6 |
Trevi Finanziaria Industriale | 49 | 8.0 | 10.3 | -0.6 | 1.4 |
Tenaris | 15,347 | 20.6 | 22.2 | 12.0 | 13.6 |
Tecnicas Reunidas | 1,486 | 3.4 | 3.8 | 2.0 | 2.3 |
Petrofac | 2,083 | 9.9 | 9.6 | 5.7 | 5.5 |
National Oilwell Varco | 9,283 | 9.1 | 11.7 | 0.2 | 2.8 |
Average | 10.3 | 11.5 | 3.5 | 4.7 | |
Rosetti Marino* | 2.2 | 2.8 | 1.5 | 2.0 |
Note: (**) data priced at market close on 16.04.2019. Source: FactSet and (*) Intesa Sanpaolo Research
In terms of FY19E EV/EBIT, the multiples of the selected companies are between 5.0-15.3x, with a median of 10.5x, while the FY20E EV/EBIT multiples are between 4.7-26.7x, with a median of 10.3x.
Regarding the FY19E P/E, the peers' multiples are within a 7.6-35.3x range, with a median of 17.0x, while the FY20E P/E multiples are between 7.4-43.4x, with a median of 14.6x.
Rosetti Marino - Multiples comparison | |||||
x | Price (EUR)** | EV/EBIT | EV/EBIT | P/E | P/E |
FY19E | FY20E | FY19E | FY20E | ||
Saipem | 4.6 | 11.9 | 10.3 | 35.3 | 19.1 |
Trevi Finanziaria Industriale | 0.3 | NM | NM | NM | NM |
Tenaris | 26.1 | 15.3 | 11.3 | 17.7 | 14.6 |
Tecnicas Reunidas | 26.6 | 9.1 | 7.8 | 16.3 | 14.0 |
Petrofac | 6.0 | 5.0 | 4.7 | 7.6 | 7.4 |
National Oilwell Varco | 24.1 | NM | 26.7 | NA | 43.4 |
Median | 10.5 | 10.3 | 17.0 | 14.6 | |
Rosetti Marino* | 40.2 | 7.1 | 5.6 | 28.4 | 21.4 |
NA: not available; NM: not meaningful; Note: (**) data priced at market close on 16.04.2019. Source: FactSet and (*) Intesa
Sanpaolo Research
Intesa Sanpaolo Research Department | 5 |
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Rosetti Marino S.p.A. published this content on 17 April 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 17 April 2019 12:12:04 UTC