da Intermonte – WIIT company research report

Buon pomeriggio,

di seguito e in allegato inviamo il company research report relativo a WIIT a cura di Intermonte.

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Un caro saluto,

Chiara

M: +39 344 2756238

Solid FY24 Momentum, Strong Backlog Supports FY25 Visibility

• FY24 results. In a nutshell, FY24 showcased strong execution, with robust organic growth of 8% in Italy, solid 4% growth in Germany, and a faster-than-expected Swiss turnaround (8% margin vs. breakeven). Profitability exceeded expectations, with EBITDA 2% above forecasts despite the top line being 3% lower, driven by the strategic cleanup of low-margin activities. The adjusted net profit (€14.8mn, €-2mn vs. expectations) was hit by higher D&A (€29.0mn vs. €27.2mn expected) and net financial expenses (€8.6mn vs. €7.8mn expected). Operating Cash Flow was stronger (€40.4mn, +€2mn vs. our exp.) while higher CapEx (€3.5mn one-off for a 5-year contract renewal) led to net debt landing slightly above forecasts (€215mn vs. €211mn expected). Excluding the IFRS16 impact (€11.4mn) and the value of treasury shares at the end of December 2024 (€38.3mn), net debt stood at €163mn, a leverage ratio of 2.8x adj. EBITDA.
• Conference call confirmed solid business outlook in Italy and Germany, with a multi-year order backlog at €247.3mn (up from €150mn in Jan-24). Order intake is split evenly between new logos and renewals. A strong opportunity for European cloud providers is emerging as industry clients rebalance costs, driven by a shift from public to hybrid cloud and AI adoption, alongside Trump tariffs, rising data sovereignty concerns, and recent 15-20% price hikes by hyperscalers. Datacentre utilisation by YE25 is seen at 40% in Italy (after doubling capacity) and 70% in Germany, with no expansionary CapEx planned. 2025 CapEx (ex-IFRS16) is expected at €25-27mn (€15mn growth, €12mn maintenance), while D&A is set to rise to ~€34mn in 2025 due to IFRS16 lease impacts (related to the Milan HQ and a new building in Frankfurt) and a shorter amortisation period. M&A focus remains on consolidating small providers in the DACH region for faster cost synergies, with no plans for new geographical areas. Electricity costs are ~€10mn/year, mostly fixed. The €150mn bond (3.7% yield) is performing well, with refinancing plans to be assessed after the summer as rates decline. Cybersecurity sales at ~€8mn per year.
• Change in estimates. Our EBITDA estimates remain largely unchanged, despite a 4-5% revenue cut to account for the ongoing phase-out of lower-margin services. We are revising our bottom line forecast (double-digit impact on EPS) to reflect higher D&A and financial expenses, but with no significant impact on operating FCF. On the other hand, we are factoring in higher CapEx at ~€27mn (upper end of the €25-27mn range), resulting in a 9% cut to 2025 Equity FCF.
• OUTPERFORM confirmed; new TP €26 (from €28). After updating our DCF model, we are trimming our target price from €28 to €26 (~13x EV/EBITDA’25, historical average of ~15x, currently c.10x). The stock offers solid visibility on organic growth, strong earnings momentum (adj. EPS set to more than double in two years), and attractive M&A prospects, reinforcing our positive stance. WIIT remains well-placed as a digital champion, expanding through small M&A in Italy and scaling in Germany, while benefiting from a structural shift from on-premises to cloud. Its premium cloud niche, tailored for mission-critical applications with stringent SLAs, along with a highly scalable business model, offers long-term upside.