(News Bulletin 247) – The Côtes-d’Armor telecoms equipment manufacturer experienced a difficult end to the financial year, with the access activity suffering from a slowdown in demand and greater reluctance among contractors in the implementation of their investments.

The Côtes-d’Armor telecoms equipment manufacturer has had a difficult end to the financial year. Ekinops announced Wednesday evening that it had recorded a contraction in its sales over the last three months of 2023, citing a degraded market environment, marked by the economic slowdown and a drop in demand.

This demanding market environment was particularly detrimental to the group’s access activities. Thus, Ekinops’ billings fell by 4% to 30.3 million euros (-3% at constant exchange rates) in the fourth quarter. Sales which therefore came out almost 3 million euros below the TP ICAP Midcap estimate.

“Access activity, penalized by the degraded economic context, and in France by still high stock levels among its operator clients, remained difficult,” adds the financial intermediary. And over the whole of 2023, these same activities recorded a decline of 15%, including 25% in the second half alone. Beyond a demanding basis of comparison, access solutions have suffered from a slowdown in demand and greater reluctance on the part of principals in implementing their investments, a level of stocks equipment within large operators, and access to sources of financing more difficult and more expensive for operators.

A meager increase in activity in 2023

This poor performance completely obscured the clear growth in sales of optical transport solutions. They jumped 27% over the whole of 2023, driven by the group’s numerous commercial successes, both in the United States and in Europe. The company cites, for example, the signing at the end of the year of a multi-year contract with Deutsche Glasfaser. It aims to modernize and unify the German operator’s optical transport network infrastructure.

Overall, over the entire 2023 financial year, Ekinops’ turnover stood at 129.1 million euros, an increase of 1% in published data and 2% at a rate of constant changes.

Any hope of a rebound in 2024?

Over the entire 2023 financial year, Ekinops confirms its objective of an Ebitda margin (gross operating profit) of between 13% and 17%. And for 2024, management aims to achieve a level of activity in the first half of 2024 higher than that of the second half of 2023.

TP ICAP Midcap reads between the lines of management’s comments and understands for its part “that the turnover for the first half of 2024 will undoubtedly be in decline, the group contenting itself with cautiously forecasting sequential growth, management estimating that the low point was hit in the third quarter of 2023, and that the turnover of the first half of 2024 should be higher than that of the second half of 2023.

For the whole of 2024, Ekinops’ activity should be driven by the rebound in sales of access equipment, assuming a gradual rebound in the economic situation. The launch of a major new optical transport product during the summer “could boost sales towards the end of the financial year”, says TP ICAP Midcap.

Enough to nourish the confidence of the research office which renews its purchase recommendation increased this summer as well as its price target of 8 euros, which implies a potential increase of 65% and a return of the stock to its levels. August 2023.

To justify this optimism, TP ICAP Midcap insists on “the extreme weakness of the valuation ratios” considered “excessive, in view of the solidity and quality of the group’s fundamentals (quality of the offer, regular gains in market share , beautiful execution, good financial health, etc.)”.

On the Paris Stock Exchange, the market does not share the opinion of the financial intermediary. The stock fell by 7% to 4.825 euros around 12:00 p.m., heading towards its one-month lows.