(Finance) – Equity has increased a 15 euros per share (+9%) il target price on Newlat Foodan Italian multi-brand group in the agri-food sector and listed on Euronext STAR Milan, confirming the recommendation “Buy” in view of the imminent offering of a new bond.
Analysts point out that, even before the Princes acquisition, Newlat Food boasted a solid track record of acquisitions (13 transactions in 18 years), with a disciplined approach in terms of pricing and solid execution in terms of cost and revenue synergies. Today with Princes, Newlat Food boasts a highly diversified product portfolio (11 categories) and a solid market positioning.
Synergies, operating leverage and efficiency gains, according to Equita estimates, will lead to a 3Y CAGR of EBITDA of 13% in 2025-27, with an improving margin of 220bps. There visibility on FY24 guidance (EBITDA 175-180 million euros) seems “high“, and the implied 4Q24 exit velocity (EBITDA 50 million euros) well supports the FY25 guidance (EBITDA 210-220 million euros).
EBITDA growth, optimization of working capital (already visible in the first two months of integration) and a limited capex profile will also drive a strong cash generation: excluding the shareholder loan used for the Princes acquisition, management expects a 2024 D/EBITDA of less than 2.5x (from 3.3x combined at the end of 2023), further improving to 1.36-1.57x in 2025 and below 1x in 2026.
(Photo: Newlat)