(Finance) – Alantra ha initiated coverage on the title Next Geosolutions Europe (NextGeo), a company listed on Euronext Growth Milan and active in the field of marine geosciences and offshore construction support services, with a recommendation “Buy” and a target price of 10.4 euros per share (potential upside of 37%).
Analysts believe the group has solid competitive advantages and so be it capable of gaining further market share in the coming years thanks to: 1) proven experience with major customers (many on bid to bid); 2) competence in complex projects; and 3) BM asset-light due to superior flexibility in the use of mission-critical vessels, also from related third party Marnavi. NextGeo’s strong competitive positioning is well summed up by its ROCE of 40.8% in 2023.
NextGeo aims to increase the scale of projects, pivoting on three main pillars: 1) increase services in the value chain; 2) fleet expansion proprietary maintaining an optimal mix with chartered vessels; and 3) expand its presence into new strategic regions through M&A. Increasing services in the portfolio, including asset in service contracts, improves the group’s competitiveness and increases its chances of winning tenders (end-to-end solutions), as well as increasing backlog visibility. Analysts expect the IPO proceeds of €57.5 million to accelerate the three strategic pillars of services, fleet and geographic expansion.
With a backlog of 305 million euros at 1H24, Alantra expects the group to show strong growth in sales in the coming years, driven by offshore wind farm projects (CAGR 23-26 sales at +26%). NextGeo plans to maintain operational efficiency, with EBITDA which will reach 78.6 million euros in 2026, showing a CAGR of 25%. EBIT is expected to reach 66.5 million euros in 2026, with a margin of 22.4%, with a net profit of 54.6 million euros in 2026 (CAGR of 23.2%). Alantra expects the asset-light business model to persist, generating a FCF cumulative of 46 million euros during the period 2024-26, with an ROCE averaging 30% and reaching 31% in 2026.