Pegas Nonwovens: Výsledky za 2Q17 nedosáhly tržního očekávání, výhled potvrzen

Pegas Nonwovens has reported earnings results this morning.
They missed the market consensus.
The earnings were negatively affected by growing polymer prices.
The full-year outlook was confirmed.  

Sales grew by 8.5% y/y to EUR 56m due to an increase in polymer prices.
EBITDA amounted to EUR 9.5m (-15.5% y/y). The decline is again owing to the mentioned growth in polymer prices and the revaluation of stock options (EUR -0.6m vs.
EUR -0.4m a year ago). Adjusted EBITDA reached EUR 10.1m (-12.9% y/y). Net profit slumped year-on-year owing to the FX effect (USD/EUR). In 2Q17, the FX loss was EUR -2.1m while a year ago Pegas booked a gain of EUR +1.7m.

What is positive is that Pegas produced more volumes than we had expected. This is due to an earlier launch of the new line.
Moreover, Pegas slightly raised its outlook for the total production of the new line (newly almost 5kt, earlier 4kt). It is also positive that management confirmed the full-year target for EBITDA of EUR 43-50m. The result for the first half of the year makes up 41.4-48.2% of the mentioned target.
Please note that results in the second half of the year will be supported by the new line and we expect Pegas to meet the guidance.  

Although the results are disappointing and they missed market expectations, we do not expect a negative market reaction.
The stock price will not follow the company’s fundamentals but rather R2G Rohan’s effort to take over Pegas.
A voluntary takeover bid will be published by R2G Rohan tomorrow morning.
According to earlier information, the company offers CZK 1,010 per share.
At the current market price of CZK 1,012, the stock will be immune to the weaker results.  

Source: Pegas Nonwovens, J&T Banka