QUEST HOLDINGW (Q4/FY:20 review): The company reported a better than our estimates full set of FY:20 results

QUEST HOLDINGS (Q4/FY:20 review): 
  • The company reported a better than our estimates full set of FY:20 results on based on outperformance of the retail segment both on sales and EBITDA.
  • In more details:

§   Consolidated sales settled at €721.4mn, 20.2% higher y-o-y and 4.2% greater than our call (€692.3mn) on superb retail sector top line performance far exceeding our call by 5.15% (€420mn sales vs estimate €400mn, 24.5% higher y-o-y) and better than projected courier services sales (€125.93mn vs €118.43mn estimate, +15.8% higher, +6.33% positive divergence from our estimate).

§   EBITDA landed 12.2% higher to €59.9mn vs our call for €56.4mn, the difference coming again from better performance (EBITDA Margin) of the retail sector and higher operational performance by UNISYSTEMS (Margin at 6.1% vs 5% estimate) and despite around €4mn non recurrent one-offs related to COVID-19 effects, tax on RES and higher courier expenses (€2.5mn) for increased services demand. Recall that FY:19 figure included €1.4mn positive reverse provision for intellectual rights.

§   Net income skyrocketed 102.2%, more than doubling and despite negative €11.2mn tax burden due to reserves capitalization to €16mn, €2.4mn ahead of our call for €13.6mn.

§   The company will distribute an additional €0.15/share (gross) dividend to shareholders (our call was for €0.17/share) on top of €0.30/share already distributed (capital return in December 2020), totaling a shareholders’ remuneration of €0.45/share (4% yield based on yesterday’s close €11.4, +6.5%).

§   The company ended FY:20 in a net cash position of €10.2mn (€24.7mn in FY:19) despite increased €26mn CAPEX for the year, mainly related to currier services new logistics hub and a new solar park acquisition (1.8MWs in December 2020).

§   Retail sales advanced 24.5% to €420mn with EBITDA margin relaxing to 3.7% (3.85% in 2019) despite the absence of €1.4mn reverse provision. EBITDA reached €15.5mn, 19.53% higher on market share gains (APPLE, XIAOMI), air conditioning sales effect (higher margin business) and economies of scale (operating leverage effect).

§   IT services sales came in 15.5% higher to €132.4mn on EBITDA margin expansion +122bps to 6.14% benefiting from revenue flow in the EU and Greece (on going state’s digitalization process).

§   Courier services sales advanced 15.8% to €125.93mn on increased services demand due to pandemic (that led to increased internet sales and respective higher delivery needs) while EBITDA margin was burdened by 110bps to 13.5% (14.55% in FY:19) on increased expenses (€2.5mn) related to one-offs such as personnel, logistics and transportation related costs, which will eliminate following the operation of the new courier hub in late 2021.

§   Electronic transactions sales closed 3.6% higher to €34.2mn impacted by physical stores extended lockdowns during 2020 and new ban agreement in late 2019 allowing for kickbacks in the 2018-2020 period (ended in 2020) and sales for the new agreement period (2021-2024).

§   Energy segment sales upper dived 36.5% higher to €9mn on FY operations effect of the new 12.5MWs solar park acquired in 2019 with EBITDA and EBITDA margin burdened by €0.5mn due to one off tax imposition to deal with RES regulator deficit. Segment will be further enhanced by 1.8MWs acquired in late 2020 that will generate revenue and EBITDA stream in 2021.

  • §   Company benefited rather than impacted by the pandemic crisis as it managed to expand activities, gain market shares and operating without disturbs for all the period. 2021 looks promising g with projected IT retail sales to come up in double digit growth figure impacted by the new APPLE series product launch, IT services segment benefiting from ongoing public and private digitalization process and flows from EU projects, courier services being again on the spotlight as altering demand persists, electronic transaction revenues positively impacted by lift of restrictions and retail relaunch and energy sector boosted by new and any other potential solar parks acquisitions

Overall a sound set of financial performance despite pandemic which will lead us to revisit our model and update our estimates and TP. We maintain OVERWEIGHT Recommendation. We will revert with an update following today’s management presentation (conference call) for the company’s financial performance. We favor QUEST’s diversified business model, cash generation and unleveraged B/S. QUEST trades at a projected 2021 PE14.3x and EV/EBITDA 5.9x.

  • The following tables summarize QUEST Group FY:20 financial performance vs our estimates:

Quest Group P&L  (€mn)

FY 2019 (A)

FY 2020 (A)

% chng y-o-y

FY 2020 Est

Actual from Est

Retail Products (IQT,APPLE,YOU)

337.29

419.95

24.51%

399.37

5.15%

% of consolidated sales

56.18%

58.22%

57.65%

IT Services (Unisystems)

114.68

132.37

15.43%

131.06

0.99%

% of consolidated sales

19.10%

18.35%

18.92%

Courrier/Postal Services (ACS)

108.73

125.93

15.81%

118.43

6.33%

% of consolidated sales

18.11%

17.46%

17.09%

Electronic Transactions (CARDLINK)

32.98

34.17

3.61%

34.18

0.00%

% of consolidated sales

5.49%

4.74%

4.93%

Solar Energy

6.58

8.97

36.34%

9.22

-2.76%

% of consolidated sales

1.10%

1.24%

1.33%

Other – Non allocated

0.06

-0.03

-155.17%

0.53

-106.02%

% of consolidated sales

0.01%

0.00%

0.08%

Total Consolidated Sales

600.32

721.36

20.16%

692.79

4.12%

Retail Products EBITDA

13.00

15.54

19.53%

13.52

14.92%

% of consolidated EBITDA

24.70%

25.94%

23.98%

EBITDA margin

3.85%

3.70%

-15 bps

3.39%

+31 bps

IT Services EBITDA

5.64

8.12

44.01%

6.55

23.94%

% of consolidated EBITDA

10.72%

13.56%

11.62%

EBITDA margin

4.92%

6.14%

+122 bps

5.00%

+114 bps

Courrier ACS EBITDA

15.82

16.96

7.19%

17.53

-3.24%

% of consolidated EBITDA

30.06%

28.31%

31.09%

EBITDA margin

14.55%

13.47%

-108 bps

14.80%

-133 bps

CARDLINK EBITDA

13.62

11.95

-12.31%

11.62

2.81%

% of consolidated EBITDA

25.88%

19.94%

20.61%

EBITDA margin

41.30%

34.96%

-635 bps

34.00%

+96 bps

Solar Energy EBITDA

4.86

6.72

38.46%

7.28

-7.72%

% of consolidated EBITDA

9.22%

11.22%

12.92%

EBITDA margin

73.83%

74.97%

+114 bps

79.00%

-403 bps

Other EBITDA

0.40

0.61

53.27%

1.00

-39.00%

% of consolidated EBITDA

0.76%

1.02%

1.77%

Total EBITDA

52.63

59.90

13.81%

56.38

6.23%

EBITDA margin

8.77%

8.30%

-46 bps

8.14%

+16 bps

EBT

30.18

35.26

16.85%

33.51

5.22%

EBT margin

5.03%

4.89%

-14 bps

4.84%

+5 bps

Taxes

21.88

18.92

-13.53%

19.24

-1.66%

Tax Rate

72.52%

53.67%

-1,885 bps

57.42%

-376 bps

EAT

8.29

16.34

96.99%

14.27

14.50%

EAT Margin

1.38%

2.26%

+88 bps

2.06%

+21 bps

Minorities

0.40

0.38

-4.73%

0.64

-40.35%

% on EAT

4.85%

2.34%

-250 bps

4.50%

-216 bps

NET INCOME

7.89

15.96

102.17%

13.63

17.08%

NET INCOME Margin

1.31%

2.21%

+90 bps

1.97%

+24 bps

QUEST HOLDING

2019

2020

Y-o-Y

2020 Est.

Act. vs

2019

2020

Y-o-Y

2020 Est.

Act. vs

EUR thous.

FY

FY

(%)

FY

Est.

Q4

Q4

(%)

Q4

Est.

Sales

600.3

721.4

20.2% 

692.3

4.2% 

200.2

240.4

20.1% 

211.4

13.7% 

EBITDA

53.4

59.9

12.2% 

56.4

6.3% 

14.1

16.9

20.0% 

13.4

26.5% 

EBITDA Mrg

8.9% 

8.3% 

-59 bps  

8.1% 

+16 bps 

7.0% 

7.0% 

-0 bps 

6.3% 

+71 bps 

Net Income

7.9

16.0

102.2% 

13.61

17.2% 

-7.8

8.7

211.3% 

6.3

37.1% 

Net Mrg

1.3% 

2.2% 

+90 bps 

2.0% 

+25 bps 

-3.9% 

3.6% 

+749 bps 

3.0% 

+61 bps 

Conference Call Details: Thursday April 8 15:30 local Athens Time

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