(Finance) – TP ICAP Midcap ha coverage began on the title Casta Diva Group (CDG), a company listed on Euronext Growth Milan and active internationally in the digital and live content sector. The target price was set at 2.50 euros per share, while the judgment on the title is “Buy“.
Analysts write that, operating in two fragmented markets (live communications and branded content), the Covid-19 pandemic has left a plethora of operators in financial difficulty. In fact, within the Live Communication market (and events in particular), approximately 60% of the companies operating there have seen their turnover decrease by more than -75% (source: Astra Ricerche, Casta Diva Group). These market conditions have led Casta Diva Group to cover a active role in market consolidationhaving finalized three acquisitions (Genius Progetti, Akita Film and E-Motion) from 2022.
Having invested more than 16 million euros in M&A since 2022, the group is now a leader in two different markets, which allows it to participate in all tenders that are offered on the market. The management’s long-term ambition is to create a national champion, with a turnover exceeding 200-300 million euros, capable of competing with the main European operators.
TP ICAP Midcap estimates growth of sales at a CAGR of 15.3% (2022-2026) to reach €148.3 million by 2026. Throughout the period, it expects the two business units to maintain double-digit growth rates, with the Creative business unit Content Production set to increase to 28.5% of total revenues by 2026 and the Live Communication business unit set to represent approximately 71.5% of total revenues by 2026. EBITDA margin will follow the same trend, reaching 11% by 2026.
Following 11.3 million euros invested in CAPEX since 2017 (of which approximately 6 million euros in 2022), a surge in D&A levels is estimated in 2024, causing the EBIT margin to 5.8% (against 6% in 2023), and then quickly recovered to reach 8.1% in 2026.
Looking ahead, barring any potential M&A activity, the broker believes management will continue to remain solid cash generation (between 5-7 million euros per year), significantly reducing the position of net debt, estimating a net cash position of over 13 million euros by 2026, thus leaving ample space for external growth. Since 2018, excluding the Covid years, the group has always maintained a leverage ratio > 2x, despite being active on the M&A front.
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