(Finance) – Bestinver has coverage started on the title Valtecne, a company listed on Euronext Growth Milan which operates in the sector of high precision mechanics for medical devices and industrial applications. The Valuation Range (VR) was set at 6.5-7.5 euros per sharewhile the judgment on the title is “Buy“. The company from Valtellina made its debut on Piazza Affari at the beginning of March with a placement price of 5 euros per share.
Analysts expect i revenues grow to a 10% CAGR in the period 2022-2025, reaching 32 million euros in 2025. The top line should be supported by the positive outlook for both markets in which the company operates, with a growing contribution from medical devices. It is expected that the medical segment reaches an incidence of revenues slightly above 60%, from around 49% in 2022.
The positive trend highlighted in 2022 in terms of margins should continue in the following years, supported by the growing incidence of the medical sector, characterized by higher margins and low cyclicality, and by a lower weighting of raw material costs. These effects should lead to a Adjusted EBITDA margin by 23.7% in 2025.
In terms of financial position – thanks to the growth of the business, profitability and the declining trend of CAPEX after the strong commitment in 2021 for the construction of the new building – Valtecne should be able to record a strong cash flow generation already in 2023. This trend should bring l company to significantly improve its NFP, which should reach a positive value in 2025.
Between strengths of the company are mentioned: competence; flexibility in the production process; high differentiation, presence in a segment (medical) with low cyclicality; efficiency; high-tech machinery; certifications; ability to keep the customer; international clients of primary standing and recognition; socus on quality processes; clear separation between the industrial and medical device segments.
The opportunity Indicated are: entry into new segments (mainly medical, eg trauma, dentistry); vertical and geographic growth; M&A after IPO; interesting growth prospects for the medical market; increased visibility among possible new customers after the IPO.
The major weaknesses they are: high dependence on large customers; low geographic diversification; strong competition in the reference sector; limited commercial network; relatively low capacity, not keeping pace with strong demand.
Furthermore, i higher market risks there are: entry of new players; rapidly changing technological environment; slowdown in the industrial market; possible difficulties to increase capacity.