Ekopak Surprising press release triggers sell off

Following December's profit warning, Ekopak again astounded the markets yesterday by announcing an approximate €8m revenue restatement of its recently published FY24 numbers. We were surprised to learn that the restatement pertained to revenue recognition of engineering efforts linked to the Waterkracht project, which was not disclosed at the time of the FY24 release. Additionally, the company is investigating balance sheet strengthening measures, which will likely result in a dilutive capital increase. Ekopak also announced plans to strengthen its management team, with further communication to follow. The company is currently searching for a new CFO, but we expect additional management enhancements beyond this role. The shock press release led to a further 35% drop in the stock price. Over the past year, slower-than-expected business plan execution and inadequate communication have eroded investor trust in the promising disruptive water player. Rebuilding that trust will require both time and consistent earnings delivery. Given the lack of short-term triggers and financing uncertainty, we rate the stock a Hold (from under review) with an updated target price of €5.5.