Unfavourable FX movements weighed on Q1 profit

On Monday, AMC, ANY Security Printing Co. reported a net income of HUF 474mn (-56%
YoY) on net sales of HUF 11.2bn (-4% YoY) for Q1/23. Though results were down YoY, we
don’t attribute much importance to that as Q1 was distorted by several factors, including
a predominantly non-realized FX loss of HUF 245mn.
 EBIT came in at HUF 863mn (-42% YoY), EBITDA totalled HUF 1,451mn (-29% YoY). The
significant drop in earnings were also attributed to the high base period, which was
positively impacted by elections and document renewals after covid-19. So it made
comparison difficult.
 Key positives: Very good news was, however, the share of export sales, which accounted
for 43% of total. Both security products and solutions and card manufacturing and
personalisation segments saw revenue growth, thanks to higher demand for passport and
paper-based security documents and card document.
 Key negatives: Interest expense was quite high as it amounted to HUF 111mn. We expect
that the Company will benefit from the current rate environment this year, but it hasn’t
materialized yet due to higher interest rates on revolving loans. Later this year, we expect
a significant improvement on that line.
 In our March note, we argued that the high yield environment and uncertainty will not last
forever, so it’s worth thinking about what comes next. We consider ANY as one of the most
attractive small-cap stories in the region due to the limited competition in the sector, as well
as the Company’s growth story, know-how and the announced deal with Angola, which will
add billions of HUF in sales annually in the next 10 year. We reiterate our 12m ex-div TP at
2,450 HUF/sh. With adding the dividend of 161 HUF/sh, this implies a roughly 62% upside
potential compared to Monday’s closing price.