MILAN, Sep 27 (Class Editori) — Piazza Affari appreciates Nexi's strategic plan to 2025 as it judges the medium- to long-term financial targets, presented by the company active in digital payments at the Capital Markets Day meeting with analysts and investors on September 27, as above expectations. The opening stock rises by 7% returning above 9 euros, the price of the 2019 IPO. Since the listing to today, the Group led by CEO Paolo Bertoluzzo has expanded its operations to more than 25 countries. Now Nexi's new growth strategy is along three lines: differentiation, accelerated and targeted growth in the SME, e-commerce and advanced digital issuing sectors, and realization of strong synergies and continuous operating leverage. An increase in synergies from the integration of Nets and SIA is also expected.
Financial targets
Targets for the period 2021-2025 on an organic basis, approved by the Board of Directors chaired by Michaela Castelli, call for an average compound annual increase in net revenues of 9%, above the consensus forecast of +7%, EBITDA at +14% above the consensus forecast of +12%, and EBITDA margin expected to grow by 900 bps by 2025. Operating cash flow is indicated at 2.8 billion euros over the period 2023-2025 with net financial leverage of 1-1.5 times (net debt to EBITDA) to 2025. Normalized earnings per share are expected to show a compound average annual increase of 20% over the 2021-2025 period, higher than the consensus +14%. For 2023, “we expect revenue growth of at least 7% and double-digit EBITDA growth,” Bernardo Mingrone, CFO of Nexi, stated during Investor Day, pointing out that guidance will still be provided next February. Moreover, of the 2.8 billion euros in excess capital in the plan for 2023-2025, about 600 million euros will already be created by next year, as added by Mingrone.
The use of cash
Specifically, the company explained, "the projected excess cash of approximately 2.8 billion euros in 2023-2025 will allow Nexi to have the flexibility to explore a number of value-enhancing opportunities for all shareholders, the positive impact of which is not reflected in the financial outlook presented". Depending on opportunities and the market environment, the Group will consider whether to reduce debt, pursue strategic M&A opportunities, or return capital to shareholders through buybacks or dividends. “We will be very rational in growth” through M&A, CEO Bertoluzzo stated speaking about the segments in which acquisitions may take place. In particular, during Capital Markets Day, the CEO cited consolidation in merchant services and European expansion in addition to improving capacity in e-commerce and software as key segments in which to seize external opportunities. “We are aiming for new geographies beyond those in which we are present. We want to enter new markets in order to acquire new customers in the geographies where we are less active,” Bertoluzzo added.
Increasing synergies
Nexi increased cash synergies estimates allowed through the integration with Nets and SIA. If for 2022 the company confirmed a 105-million import, synergies to carry out by 2025 amount to 365 million and 405 million on a longer term, over 25% more the one already announced. “We worked in every space trying to increase our synergies,” Bertoluzzo stated. Furthermore, Nexi forecasted a 10% increase in card payment transaction volumes in Europe in the 2022-2027 period compared with 7% growth in the pre-Covid-19 years (2016-2019) and 4% in the 2020-2021 period during the pandemic. In terms of card penetration, the forecast is for an average annual increase of 2% (1.2% pre-Covid-19 and 2% in the Covid-19 biennium). This market growth estimate “does not depend on the macroeconomic tensions we see in the short term, because our business has shown to be very resilient,” Bertoluzzo explained.
Stocks far away from highest points
Despite the bounce back, the stock remains far away from the peak reached in June 2021 over 18 euros with a minimum of 7.41 euros touched last June. However, the Group is carrying out new projects. For example, it is among five companies selected by the European Central Bank (ECB) for digital payment system prototypes. Accounts are on the rise with revenues at 808.2 million euros in the second quarter (+10.2%) and transaction volumes up double digits in all areas. The EBIDTA improved by 20.5% to 395 million euros with an EBITDA margin of 49%, +4% compared to last year’s registered level. In contrast, in the first half-year, revenues stood at 1.520 billion, +8.7% compared to the same period in 2021, with an EBIDTA of 702.4 million (+19.1%) and an EBITDA margin of 46%. In June, BPER and Nexi reached an agreement on a strategic partnership on payment cards.
Positive first comments from analysts
The first positive comments are quick to arrive. In fact, Equita SIM confirms its buy rating and target price at 14 euros on Nexi: “The targets are substantially in line with our expectations, but they are exceeding the consensus estimates and implying a solid organic growth profile both in revenues and in net income, alongside a strong deleverage. The targets appear very similar to those presented in 2021 by Worldline, and we believe that the relative discount of 20% is therefore not justified”.
(Source:Class Editori)
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