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• Consolidated revenues in the first nine months of 2020 reach € 48.2million (vs. € 43.2mn in the first nine months of 2019, +11.5%)
• In particular, there was significant growth in the biostimulants business to € 29.3mn (vs. € 23.4mn, +25.0%) and in the animal fat business to € 5.0mn (vs. € 4.6mn, +8.4%); on the other hand, confirmed the contraction of the retardants business to € 11.1mn (vs. € 12.3mn, -8.8%), slowed down by the Covid emergency, especially in the third quarter
• All the main geographical areas grew significantly: Europe (including Italy) at € 24.9mn (vs. € 23.7mn, +5.1%); Asia-Pacific at € 13.8mn (vs. € 11.4mn, +21.6%); Americas at € 5.7mn (vs. € 4.6mn, +25.6%). The Middle East and African market also recovered the decrease recorded in the first half, at € 1.4mn (vs. € 1.3mn, +8.3%)

SICIT Group announces that consolidated revenues in the period 1 January – 30 September 2020, if compared to the same period of 2019, recorded an overall increase of about € 5.0 million, reaching € 48.2 million (+11.5%).

The growth result concerns almost all geographical areas: from Europe (including Italy, +5.1%; of which Italy +8.6% and other countries in Europe +2.7%), to APAC (+21.6%); from the Americas (+25.6%) to the Rest of the World (Middle East and Africa, +8.3%).

This result benefited, in particular, from the growth in the biostimulants business for agriculture (+25.0%) which continues to record sustained demand; and animal fat for biofuel production (+8.4%) which more than recovered the slight drop (-1.0%) recorded in the first half of the year; while retardants for the plaster industry (-8.8%) continued to slow down, mainly due to the effects of the Covid emergency on the world construction market. Finally, revenues from withdrawals of animal by-products and tanning waste (+0.1%) recovered the delay recorded in the first half of the year (-7.4%), due to the lockdown of tanneries during last spring.

Foreseeable revenues trend also in view of the Covid emergency
With reference to the Covid emergency and its potential impact in the coming months, the Company is well aware that the uncertainty about the timing of the end of the pandemic emergency and the seriousness of the consequences it will have on the world’s major economies is still high. A possible renewal or extension of the restrictive measures against Italian tanneries could have negative effects on the supply of its raw material inputs and, consequently, on its production capacity and commercial activity. Similarly, any renewal or extension of the lockdown in countries where the Company markets its products could weaken demand for the Company’s products, particularly in the construction sector, to which retardants are addressed to (agriculture, on the other hand, seems to be much less affected by emergency dynamics).

Said so, however, the Company remains confident – also thanks to the initiatives undertaken, such as, among others, the increase in sales prices to meet the extraordinary costs link to the management of the pandemic and an August of increased operations and production – that it will continue to grow and that it will be able, if not to achieve the budget targets, at least to minimize any deviations.

Massimo Neresini, CEO of SICIT Group, commented: “In light of the health emergency, which seems to be hitting the world economy again, we are satisfied. We enter the last quarter of the year with a double-digit growth performance in the first nine months (+11.5%), further improved, thanks to the sustained demand for biostimulants and the complete recovery of animal fat production for biofuels and revenues from tanning waste withdrawing services; and despite the foreseeable decline in retardants for construction. In these times, it is a particularly valuable result, despite the fact that our sales team has not been able to travel; and always guaranteeing, on the one hand, the productive and commercial continuity necessary to serve our customers in the best way and, on the other hand, the highest safety standards to our collaborators. Moreover, our industrial investment plan has recovered the delay in the building works, due to the spring lockdown; as well as the development of new products has continued, creating tailor-made products, able to meet the different needs of agricultural (biostimulants) and industrial (retardants) companies. Although the Covid pandemic, these results support us about the possibility, even in a very difficult economic context, to pursue the targets set for the current year”.

• The independent operator based in New York suggests a fair market value between €  252.8mn and € 326.7mn, equal to a fair share value (fully diluted) between € 15.02 and € 16.23.
• The target price would correspond to an increase in the value of the stock from 41% to 52%
• Resilience of SICIT in the face of COVID-19, development of new product formations and set up of a new plant in China the factors behind the view

SICIT Group (the “Company”) announces that Arrowhead Business and Investment Decisions (“Arrowhead”), appointed by the Company, initiated coverage of the SICIT Group’s security.

Arrowhead is a New York-based, independent research and advisory firm which engages with select companies to profile and connect them to its investor network. Arrowhead will provide SICIT Group with investor relations and marketing services to communicate and participate in non-deal roadshows with interested international investors, expanding the company’s investor footprint into North America and other global capital markets.

The Arrowhead coverage initiates with a fair share value (fully diluted) between € 15.02 and € 16.03. This value is based on a fair market value between € 258.2mn and € 326.7mn*. Compared to the share price on October 15, 2020, the target price would correspond to an increase in value of 41-52%. According to the Due Diligence and Valuation Report, the reasons behind the view are to be found mainly in three factors.

First, the resilience of SICIT to the impact of the COVID-19 pandemic in the first half of 2020. In the period, in fact, the Company’s business did not suffer any significant impact, as shown by consolidated revenue up 9.4% YoY to € 35.5mn (vs € 32.5mn), adjusted consolidated EBITDA increased by 9.5% YoY to € 13.2mn (vs € 12.1mn) and an adjusted consolidated net profit increased by 14.5% to € 8.2 million (vs € 7.2 million). These results were in line with management expectations, although restrictions on mobility, transport and production, both upstream and downstream, inevitably affected some of the Company’s reference sectors**.

The second element is the development of two new product formations – granules and tabs – which will allow SICIT to enter new markets. These could represent a new sources of revenue, as the Company could also sell these products to new consumers, avoiding competition within its existing business and customer base.

The last factor is the identification of an opportunity to set up a new plant in China, which would enable SICIT to expand its manufacturing base close to other tanning industry districts. The new plant would be dedicated to the completion of finished products, using (as semi-finished product) hydrolized proteins that would be produced only in the production sites in Arzignano and Chiampo, Italy.

The full initiation report is available to download by clicking here. Future updates to Arrowhead’s research and other SICIT news can be accessed by subscribing to SICIT Group’s profile page on ABID’s proprietary platform at www.abid.co/BIT.SICT.

 

*Coverage initiated on October 16, 2020. The share price was € 10.65 on October 15, 2020, for a market capitalization of € 217.3mn.

**Although the biostimulant area grew by 19.4% YoY to € 21.7mn in H1 2020, retardants fell by 2.1% YoY to € 8.5mn and fat by 1% YoY to € 3.38mn.