Record quarterly earnings, raised profit guidance

Record quarterly earnings, raised profit guidance
 Waberer's Group achieved its highest quarterly EBIT and highest net income of the recent
period in the first quarter of 2023. EBIT totaled EUR 11.2 mn (+146% YoY), while net
income came in at EUR 10.4 mn (+508% YoY), significantly ahead of the same period of
last year, which was also affected by a non-realized FX gain of EUR 2.2mn. In light of this
year’s solid start, the management raised its profit guidance for 2023.
 EBITDA contribution by segment:
oITS: EBITDA amounted to EUR 10.1mn (+68% YoY) In the ITS, result was boosted
by the increasing pricing power at multinational clients.
oRCL: EBITDA totalled EUR 8.0mn (+7% YoY). RCL was negatively impacted by the
deteriorating domestic demand, which was offset by the expansion of logistics
activity serving the domestic investment activities.
oOther segment (insurance): EBITDA amounted to EUR 5.5mn (+96% YoY). Financial
performance of the insurance segment rose on (1) high interest rates and (2)
lower expected damage related costs – due to the introduction of IFRS17
accounting principles.
 Key positives: (1) record Q EBIT and net income, (2) model shift in the ITS continued to
improve margins, (3) the Company is expected to benefit from falling energy prices.
 Key negatives: (1) demand for FMCG products drops in Hungary, thus volumes fall, (2) rate
hikes may soon weigh on auto sales, despite stable order books in the automotive sector,
(3) regarding the insurance segment, IFRS17 may cause some volatility in the P&L in the
next few quarters.
 Profit guidance has been raised. Based on Q1 results, assuming favourable energy costs,
as well as the results of the transportation tenders in Q1 2023, the management expects
EBIT for 2023 to exceed 2022’s EBIT of 33.3mn (excluding the positive one-off regarding
the out-of-court agreement announced on April 4, 2023). We note that the mgmt. previously
expected flat EBIT for this year when they announced in March.
 CEO Zsolt Barna highlighted: “We have had a very successful tender season in recent
months, which reflects the demand for high quality, reliable, customer-focused services in
the international transport market and supports our successful operation throughout the
year. Deteriorating macroeconomic effects currently negatively influences the price level on
spot market for ad hoc transfers, which is becoming less significant in our portfolio. RCL’s
diversified activities compensated for the decline at FMCG customers with an increase in
the logistics activity related to domestic investments and a stable order volume by
customers in the automotive sector. We started the construction of our first modern own
warehouse in the first quarter and we are working on a further ambitious warehouse
development concept, which could both support the increase of the competitiveness of our
warehousing activity and provide infrastructure for further organic growth.”
 We leave our estimates, TP and recommendation unchanged. Waberer’s soon distributes
100 HUF/sh as dividend to its shareholders for the first time since its IPO. This was a major
step to lure investors’ attention, but the low liquidity of the stock may keep investors away
from Waberer’s. Having said that, the management’s efforts are remarkable, while the
stock is dirt cheap in our view.