Gorenje 1Q18: Results in-line with expectations, however the main topic is Hisense takeover bid.
1Q18 sales revenues of the Group amounted to EUR 295.6m, down by 3.3% YoY, but when accounting for divestments of coal trade operations, sales were up 0.8% YoY. Sales in Eastern Europe stagnated YoY, while West Europe recorded sales decrease due to repositioning (higher prices led to lower volume). In other markets sales increased YoY. EBITDA amounted to EUR 22.4m, 8.7% more than comparable EBITDA in 1Q17. EBITDA margin increased YoY from 6.3% to 6.7%. Net profit amounted to EUR 2.5m, 23.5% more YoY, which translates into 31.1% of the annual plan. Results are roughly in-line with our expectations and brought little surprise. Please note that core business generated a meagre EUR 0.1m of profit.
However from market price point of view the key news is that Gorenje management picked Hisense as a strategic partner while the latter is expected to announce a takeover bid in the upcoming month for 50% + of the company at EUR 12 per share. Since our last target price was at EUR 5.8 per share (with hold rating attached) and based on FCF condition and estimates, the 8.8x EBITDA (adjusted 7.4x) bid price should clinch a win. True, a takeover candidate likely saw Gorenje not through the FCF prism but as a good opening position for European market and as a gain of several brand names. So our target price became irrelevant, a relevant price is EUR 12 per share …
Gorenje dd is a Slovenia-based company engaged in the production and sale of household appliances. The Company operates through three business segments: Home, producing and selling products and services for home, such as major domestic appliances (MDA), small domestic appliances (SDA), heating, ventilation, air conditioning (HVAC) and kitchen furniture; Ecology, providing ecology-related services; and Other, with such activities as tool-making, engineering, hotels and hospitality services, trade, and design services. The Company covers the global markets with a portfolio of ten brands: Gorenje, Gorenje+, Korting, Sidex, Mora, Atag, Etna, Pelgrim, Asko and Upo. As of December 31, 2011, the Company was the parent company of the Gorenje Group, which consisted of numerous companies in such countries as Slovenia, Austria, Germany, Italy, France, Spain, the United Kingdom, Denmark, Sweden,, Norway, the Czech Republic, Slovakia, Hungary, Poland, Bulgaria and Croatia, among others.
ALTA Invest, investicijske storitve, d.d., (ALTA Invest, investment services, Inc.) is a part of ALTA Group, the biggest financial non-banking group in Slovenia. ALTA Invest has around 28% market share on the domestic Ljubljana Stock Exchange and has more than EUR 95m of assets under management.
Our trading advantage is our execution of large trading blocks with low impact on the market. We offer trading on several platforms on numerous markets, with a wide variety of financial instruments. Our advantage is also a research department, which is both sell side and buy side and has the far most extensive and regular coverage of domestic companies. We cover 9 companies on Ljubljana Stock Exchange, which is around 90% of Mcap on LJSE – and here we are practically the only local broker providing this kind of extensive and regular coverage for Slovenian companies.
A part of ALTA Group are ALTA Skladi, a mutual fund asset management company with roughly EUR 260m of asset under management. ALTA Group is also extensively involved in corporate finance projects and raised considerable assets (fixed income and equity) in the last two years for several companies.
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