Classification of GBC AG to Somec S.p.A.

Somec S.p.A. (Somec) specialises in the engineering, design and implementation of complex projects in the civil and naval sectors and operates in three different business areas: Horizons (customised systems for naval architecture and building façades), Talenta (professional kitchen systems and products), Mestieri (design and production of customised interior furnishings).

The Somec Group closed the past 2024 financial year with a moderate increase in sales of 3.2% to € 382.82 million (PY: € 371.04 million) thanks to significant growth in the core business area 'Horizons' (maritime and civil glass business). Thanks to an improved sales mix (higher share of the high-margin marine business) and greater cost efficiencies, EBITDA increased disproportionately by 62.7% to € 29.58 million (PY: € 18.18 million). At the same time, the EBITDA margin increased significantly to 7.7% (PY: 4.9%). At net level, however, a negative consolidated result (after minority interests) of € -3.30 million (PY: € -11.65 million) had to be reported due to special effects incurred, which primarily related to restructuring costs (approximately € 0.50 million) and goodwill amortisation (approximately € 4.80 million). Adjusted for these effects, an adjusted net result of € 4.80 million was achieved instead, representing a significant improvement on the previous year (PY: € -10.37 million).

The order backlog at the end of the past financial year totalled € 744.0 million (of which around 66.0% was attributable to Horizons) and was therefore almost at the same high level as the previous year (PY: € 752.0 million). According to the company, 39.5% of this extensive order backlog will be recognised as revenue in the current financial year and 26.2% in the following financial year 2025.

In view of their positive business development and strong order backlog, Somec's management is forecasting single-digit percentage growth in Group sales and a significant improvement in profitability for the current 2025 financial year compared to the previous year.

In light of the positive company performance, extensive order backlog and the confirmed outlook in the first quarter, we are forecasting a moderate increase in sales of 4.1% to € 398.55 million for the current financial year (PY: € 382.82 million). Due to an expected improvement in the sales mix (higher share of the high-margin glass business), we also anticipate even stronger EBITDA growth of 12.1% to € 33.17 million (PY: € 29.58 million) and an increase in the EBITDA margin to 8.3% (PY: 7.7%).

With regard to the subsequent financial years 2026 and 2027, we expect Somec's successful growth strategy to continue, with the core business area 'Horizons' being the Group's main growth driver. In addition, the 'Mestieri' division should also be able to additionally fuel the Group's growth momentum as part of our expected return to (segment) growth.

Accordingly, we are forecasting a further moderate increase in sales for these financial years 2026 and 2027 to € 419.02 million and € 441.12 million respectively. At the same time, we anticipate a disproportionately high increase in EBITDA to € 36.53 million and € 39.79 million respectively due to the expected stronger sales weighting of the traditionally high-margin 'Horizons' segment. At the same time, the EBITDA margin should improve further to 8.7% (FY 2026) and 9.0% (FY 2027).

Overall, the Somec Group's strong niche positioning in the maritime sector (global market leadership in ship glazing, etc.) should enable it to benefit significantly from the booming cruise industry in the area of new ship construction and ship modernisation (refitting projects). We also anticipate a further increase in business volume in the US facade business based on the expected robust demand for complex customised customer solutions. The 'Mestieri' business area should also be able to return to growth thanks to its almost unique range of services and the business model-specific optimisation measures implemented. In particular, their promising strategic positioning in the various end markets, especially the luxury and luxury-related sectors, should contribute significantly to this.

As part of our DCF valuation model, we have calculated a price target of € 22.50 per share based on our sales and earnings estimates for the current financial year and subsequent years. Based on the current share price level, we therefore assign a 'BUY' rating and see significant upside potential in the Somec share.