(Finance) – The industrial trend of Convergencesa company listed on Euronext Growth Milan (EGM) and active in the telecommunications and energy sectors, “has never been as good as in this period” and the Campania company is preparing to close 2023 with “the best year ever in terms of marginality” and therefore there can only be “strong dissatisfaction with what the market is producing for the stock“. This was told to Finance byCEO Rosario Pingaroafter the shares lost more than 50% in the last month, according to the company in the absence of any business-related reason but due to a worsening of EGM conditions, which have penalized the majority of listed SMEs this year.
“THE first nine months of 2023 they closed with both of the Business Unit with positive margins – says Pingaro – This is news, especially for Energy which was suffering from poor if not negative margins since the 2021 energy crisis. From the end of 2022 onwards we have the Energy BU closed with -3/-4% the first three months, with a breakeven the first 6 months, with a positive margin of 2/3% the first nine months, and we count on continue to improve and close at 4/5% by the end of the year”. The TLC BU has instead been “constantly at values that fluctuate between 25 and 30% margins, trending upwards over the last three to six months”.
In addition to this positive trend situation, the CEO highlights that there are other innovations that he has announced to the market and which are becoming strategic for Convergenze. The first is theentry into the IoT market alongside Suez for the smart metering of water meters (with which it has closed an agreement to cover the entire city of Salerno). “We are on the home stretch for another supply in the Cilento area, with dimensions similar to that of Salerno, and therefore an important partnership with a multinational which I am convinced will see us also engaged together in other projects on which we are working, in other Italian territories and beyond”, states the entrepreneur.
Another important aspect is the launch of the new Media & Content Delivery BU“which will start in first quarter 2024 with an important partner this time too, such as the Spanish company Agile Content”. “We will offer media services, in the sense that we will start with a package of thematic video on demand channels, first-run films, which will make our offer comparable to that of companies at a national level, which today already offer a bundle of connectivity and media products – explains the CEO – So we would also be able to recover this gap and be able to offer a product that is competitive in economic terms and very valid in terms of content”.
Also in light of these new developments, Pingaro expresses strong dissatisfaction with the performance of the stock: “We know that this trend is not limited only to Convergences, but is generalized, and I think it is related to a perfect storm that has been created on the market today due to the reduction in liquidity due to the migration of capital towards forms of guaranteed returns, with the funds that had PIRs that they had to liquidate, and this in recent months has certainly led to a decrease in liquidity on the EGM market, which has technically generated some problems within the structures of institutional funds”. “Convergenze was also judged illiquidand therefore selling pressure has been generated on the stock, which is absolutely not justified by the fundamentals – says the CEO – Today we are worth twice this year’s EBITDA, which we will close in two months and which is therefore now certain, and this gives the measure of how undervalued a title like Convergenze is today”.
After the director Paolo Pescetto purchased shares to reaffirm trust, and with Pingaro stating that he had already started purchasing shares at the beginning of the year but had not communicated it because the purchases did not exceed the internal dealing limit, the society is “working on strategies to try to convey the message to the market that the price today is highly undervalued and we will soon come out with a long-term strategy to support this thesis of ours and to demonstrate that we want to continue to be present in the market, but with valuations that are certainly more in line with the numbers we are producing”. To a question about the possibility that a will soon be started buybackthe CEO replied: “We’re working on it.”
Meanwhile, the feedback that comes from institutional investors I’m from “inability to act in any way“. “The investor tells us: we’re sorry, but unfortunately we don’t have liquidity, unfortunately compliance limits us from investing in companies that are considered not very liquid, so basically it’s a waiting dialogue: they are curious to know about future development programs and there is continuous attention towards Convergence, and it will certainly produce effects on the evaluation when the disturbance that has been created is somehow overcome”.
Recounting how numerous retail investors have written to him expressing concern about the performance of the stock, the CEO states that “I can only reassure and confirm that this performance it is not a sign of any problem, of any change in forecast, of any change in business plan or shareholder structure or other things specific to Convergenze, but it is a phenomenon that affects the EGM market and the TLC industry, which is certainly not as appealing as it was a few years ago, but within this scenario companies like Convergenze which are vertically integrated and regional in size are today performing absolutely better than the market in the TLC sector and in the energy supply chain”.
Beyond the difficult moment on the stock market, Convergenze’s objective is to increase its relevance within the Italian TLC panorama both with organic growth, which is improving quarter after quarter, and with an external growth strategy. “After the acquisition of Positivo, we have other opportunities in the pipeline that we will try to materialize in 2024“, says Pingaro, explaining that for theBUT “we look at 360 degrees” and not just at the reference territory and “what we are looking for is the infrastructure, therefore operators who have invested in infrastructure over the years and who have good contact with the territory” and who “want to continue to build and improve their industrial plans with a strong partner like Convergenze”.