In the first nine months of 2023, DIGI recorded an increase in revenue of 13.2% YoY, an increase in EBITDA of 15.9%, and a decrease in total net profit of 25.9%, amounting to EUR 39.8m.
In the Romanian market, the company observed an increase in revenue of 4.8% YoY, amounting to EUR 754.2m. Revenue growth in Romania in Q3 was mainly the result of the increase of mobile telecommunication services, fixed internet and data, and pay-TV RGUs in the period, due to organic growth.
In the Spain market, DIGI recorded revenues of EUR 466m, noting an increase of 30.5%. The increase in Spain’s revenue in Q3 was due to the increase in mobile telecommunication services and fixed internet and data RGUs in the period, mainly driven by DIGI’s attractive offerings. In the Other market, Digi witnessed a slight increase in revenues of EUR 1.1m, amounting to EUR 21.7m. A slight increase was driven by operations in Italy and Portugal.
Turning our attention to the operating expenses, in 9M 2023, OPEX amounted to EUR 1.13bn (+13.3% YoY). The highest increase in operating expenses could be observed in Spain, where OPEX amounted to EUR 372m (EUR 67.6m YoY increase). This growth follows the evolution of business developments in mobile telephony services. In Romania, OPEX increased in line with revenue growth, increasing by EUR 6.9m to EUR 423.8m.
As a result of all of the above-mentioned, DIGI reported an EBITDA of EUR 429.8m, which represents an increase of 15.9%. As a result of sales increasing faster than the EBITDA, the EBITDA margin observed a slight decrease of 0.8 p.p. and currently stands at 34.7%. Meanwhile, operating profit amounted to EUR 119.4m, representing an increase of 1.8%.
Going further down the P&L, the company recorded a slightly worse net financial loss of EUR 5.9m and currently stands at EUR 63.5m. As a result of the above-stated, the company’s net profit from operations decreased from EUR 53.7m to EUR 39.8m, a decrease of 25.9%. Finally, we emphasize the YoY changes excluded Net profit from the period (discontinued) to make a comparison with the same denominator. The discontinued operations in Digi’s financial statements highlight the sale of Hungarian operations during the comparable period in 2022.
Digi key financials 9M 2023 [EUR m]
Source: BVB, InterCapital Research
In October 2023, total equity turnover decreased 48%, MoM, with CROBEX decreasing by 2.7% during the month, ending at 2,365.44 points.
In October, we saw a slight retrace of CROBEX, noting a decrease of 2.7% MoM. The total equity turnover on the exchange is fairly below the average on a monthly basis. However, we emphasize that August & September represented above-average trading done on ZSE compared to the historical numbers, so the double-digit MoM decrease does not appear that problematic. Overall, by the end of the month, the total equity turnover amounted to EUR 22.9m, which represents a 48% MoM decrease and 48% YoY. Finally, the block turnover amounted to EUR 3.8m. The average daily turnover amounted to EUR 1m.
Monthly equity turnover on ZSE (January 2022 – October 2023)
Source: ZSE, InterCapital Research
Looking at the top 10 most traded stocks, in total they recorded a turnover of EUR 15.3m, representing 66.7% of the equity turnover during the month, which is also in line with historical data. In terms of individual stocks, Podravka recorded the highest turnover, at EUR 3m, representing 13% of the total equity turnover on ZSE during the whole month. Following Podravka, there is Valamar Riviera with EUR 2.8m (or 12.3% of the total), and Adris (pref.) at EUR 1.7m (or 7.4% of the total). If we were to look at remaining shares within the top 5 most traded companies, there are HT and Span, both with EUR 1.5m turnover or 6.6% of total equity turnover each. This would mean that the top 5 most traded stocks accounted for 45.8% of the total turnover.
Looking at the largest index on ZSE, CROBEX, we note that it retraced slightly by 2.7% during the month and ended at 2,365.44 points. CROBEX10 experienced a similar movement with a 2.7% decrease and ended at 1.755,20 points.
Performance of CROBEX10 constituents (October 2023, MoM, %)
Source: ZSE, InterCapital Research
Moving on to the CROBEX10 constituents during the month, 3 out of 10 companies recorded positive share price development, Valamar Riviera remained flat, while 6 constituents recorded decreases. The largest increase was recorded by Končar and Ericsson NT, with its share price noting an increase of 1.6% and 1%, respectively. Both of the companies noted an increase before the Q3 reports that did end up being strong for both companies. HT is to follow with 0.8%, while Valamar Riviera remained flat. On the other hand, Span recorded the largest decrease of 11.6%, followed by Arena Hospitality Group, at a 9.4% decrease. We note this is the second month of Span’s share price decreasing with a 14.4% decline during September.
Performance of CROBEX10 constituents (YTD, %)
Source: ZSE, InterCapital Research
Moving on to the YTD performance ending at the end of October, one can notice a more pronounced positive sentiment. We had 8 out of 10 CROBEX10 constituents in green, with the majority of them noting a solid double-digit return. Podravka’s share price development, without a doubt, leads the list with an increase of as much as 74.7%. Podravka is followed by Končar and Span with a strong double-digit increase of 65.5% and 29%, respectively. Atlantic Grupa follows them with 13.5%, Adris (pref.) with 11.8%, HT with 11.2%, and Atlantska Plovidba with 6.3%. Finally, Valamar Riviera also noted a single-digit increase of 4.5%. Arena Hospitality Group and Ericsson NT are the only two companies to note a negative share price development with a 3.8% and 10.3% decline on a YTD basis. This resulted in overall CROBEX10 strong double-digit growth of 27.1% on a YTD level.