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Last close As at 25/03/2023
GBP0.63
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Market capitalisation
GBP140m
Research: Industrials
Accsys showed strong revenue growth of 32% in 9M23, driven by higher sales prices (to mitigate input pressure) and a recovery in volumes in Q323 compared to H123. The company remains positive about its outlook for the remainder of the financial year, with continued good demand for both of its products. Accsys expects volumes to be c 50% higher in H223 versus H123 (or 36,000m³, with 17,000m³ in Q4) and a near doubling of underlying EBITDA for the full year (FY22 EBITDA was €10.4m). We have raised our estimates, resulting in a discounted cash flow (DCF) value of €1.15 per share (previously €1.00).
Accsys Technologies |
Stronger-than-expected revenue growth in Q3 |
Q3 trading update |
General industries |
8 February 2023 |
Share price performance
Business description
Next events
Analyst
Accsys Technologies is a research client of Edison Investment Research Limited |
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Accsys showed strong revenue growth of 32% in 9M23, driven by higher sales prices (to mitigate input pressure) and a recovery in volumes in Q323 compared to H123. The company remains positive about its outlook for the remainder of the financial year, with continued good demand for both of its products. Accsys expects volumes to be c 50% higher in H223 versus H123 (or 36,000m³, with 17,000m³ in Q4) and a near doubling of underlying EBITDA for the full year (FY22 EBITDA was €10.4m). We have raised our estimates, resulting in a discounted cash flow (DCF) value of €1.15 per share (previously €1.00).
Year end |
Revenue |
EBITDA* |
Net profit* |
EPS* |
EV/sales |
EV/EBITDA |
03/21 |
99.8 |
10.1 |
1.3 |
0.01 |
3.7 |
36.8 |
03/22 |
120.9 |
10.4 |
2.1 |
0.01 |
3.3 |
38.2 |
03/23e |
153.3 |
19.2 |
7.6 |
0.04 |
1.7 |
13.8 |
03/24e |
185.7 |
27.7 |
13.3 |
0.06 |
1.4 |
9.4 |
Note: *EBITDA, net profit and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.
Higher prices are supporting strong revenue growth
In 9M23, which ended 31 December 2022, revenues strongly increased 32% y-o-y to €109m after the modest increase of 5% in H123. Growth was driven by higher average sales prices (to mitigate input pressure and with a further small price increase in Q3) and 1% higher volumes at 42,972m³. Compared to H123, this is a significant improvement, with the first three reactors in Arnhem at full capacity again after earlier plant shutdowns and the fourth reactor ramping up since September 2022. The unwinding of higher inventory levels also fuelled volumes in Q3, which were up 46% y-o-y to 19,015m³ (-19% in H123). Another positive is that the price increases and scale benefits resulted in a higher profit per cubic meter of Accoya sold in Q3. Net debt was €52m, €9m lower than at end-September 2022, mainly because of the reduction in the NatWest loan balance after the Tricoya restructure.
No additional news on strategic projects
There was no news about the two strategic growth projects, with the construction of the Accoya plant in the US on track to be operational in March 2024 (adding 43,000m³ capacity). The Tricoya plant in Hull is in, at least, a six-month hold period; Accsys will consider all commercial factors to decide whether to proceed with the project. This includes the final costs, for which there are no indications, according to Accsys, that they will exceed the up to €35m previously communicated. We still assume that the Hull project will be continued, but it is unlikely to be operational before March 2024. Accsys also reported that it is making good progress in the search for a new CEO, and that the process to appoint a new CFO is ongoing.
Higher valuation on raised estimates
We have raised our FY23 revenue and EBITDA estimates by 4–6% for the higher than anticipated price increases, which also have a positive impact on profitability. Accsys is trading on EV/sales of 1.7x and EV/EBITDA of 13.8x in FY23e. Our DCF model is based on four reactors in Arnhem and one in Hull, while we add a separate value for the Accoya US joint venture, which is under construction. On our higher estimates, the DCF value now is €1.15 per share (previously €1.00).
Estimates raised
We have raised our estimates after the better-than-expected Q3 revenues and the confirmation by management of its expectation that underlying EBITDA will nearly double for the full year. We have raised our FY23 revenue forecast by 4% to incorporate the higher-than-expected average sales prices. Without being more specific, management commented in its trading update that profit per cubic meter of Accoya has further increased throughout Q323, fuelled also by a further small price increase during the quarter. We therefore raise our EBITDA forecast, from €18.1m to €19.2m, which brings it closer to management guidance.
Accsys also mentioned that its energy price premium (introduced in May 2022) has worked well to compensate for the higher and volatile energy prices. These have come down recently and we already anticipated 5% lower average prices for FY24, which we leave unchanged for now. We have also increased our estimates for FY24 and FY25, mainly because of the raised estimates for FY23.
These higher estimates represent revenue growth of 27% in FY23, 21% in FY24 and 23% in FY25, driven by additional capacity and pricing, while EBITDA margins are expected to improve towards 16% in FY25, driven by scale benefits and pricing.
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Exhibit 1: Change in P&L estimates |
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Source: Edison Investment Research |
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Higher valuation on increased estimates
We use a DCF model as there are no other listed companies with a business profile close to Accsys’s. The company is trading at 1.7x EV/sales and 13.8x EV/EBITDA in FY23e.
Our DCF model is based on four reactors in Arnhem and one in Hull. We still assume that the project in Hull will be continued but it is unlikely to be operational before March 2024 at the earliest. We add a separate value for the Accoya plant in the US, which is expected to be operational in mid-2024 after construction started in April 2022. On our higher estimates and unchanged assumptions (with a WACC of 10%), our DCF indicates a value per share of €1.15 (previously €1.00).
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Exhibit 2: Financial summary |
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Source: Accsys Technologies, Edison Investment Research |
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Research: TMT
Vection Technologies (VR1) reported A$4.6m in Q223 receipts, up A$0.2m q-o-q. Recent announcements of the company’s selection to develop virtual reality (VR) and metaverse technologies to promote space travel underpin the vital role partnerships play in the company’s strategy. VR1 also reported progress in commercial opportunities in defence, aerospace and service agencies, among others, all expected to bear fruit in the latter half of the current fiscal year. As such, management reiterated its FY23 revenue guidance of A$24–26m. We are encouraged by the Q223 results and maintain our FY23 forecasts.
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