(News Bulletin 247) – The motorhome specialist has published very strong half-year results, driven by robust activity. But the company disbursed more than 100 million euros of cash over the period due to an increase in inventories which will normalize.

Whether up or down, Trigano’s publications rarely leave the market indifferent. “The market has difficulty managing issues like Trigano, cyclical stocks which it fears are at the top of the cycle, which translates into high volatility,” explains Arnaud Despré, analyst at Portzamparc.

This is still the case this Wednesday. Trigano shares fell 7% around 10:45 a.m., after losing more than 8% during the morning, while the leisure vehicle specialist revealed its first half results.

Already published, turnover recorded growth of 18.4% on a like-for-like basis, driven by the strength of the motorhome market whose revenues increased by 26% with volumes up 20%.

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An insufficiently prepared market

In terms of results strictly speaking, Trigano’s current operating income jumped, amounting to 243.2 million euros over the first six months of the 2023-2024 financial year, compared to 173.4 million euros over the same period of the previous financial year. The corresponding margin increased from 10.8% to 12.8%.

“This margin is very satisfactory since it includes a dilutive effect linked to distribution (a current operating profit close to 0)”, appreciates Oddo BHF, which expected a lower current operating profit, at 232.5 million euros. .

There remains the big black point of the publication: the cash. “Despite record profits, the free cash flow generated in the first half was negative by more than 100 million euros. This is the result of a very poor performance in working capital, which, although reported, remained notable, with a cash outflow of 260 million euros,” explains Trion Reid of Berenberg.

“Margins are good in the first half, but this is not the case for cash. Operating cash flow is clearly in the red while results reached a record in the first half. The group had certainly warned that its need in working capital would reach a peak, notably due to overstocks to prepare for the production of motorhomes in the second half of the year. But the market was perhaps not sufficiently prepared for this”, adds Arnaud Despré.

Trigano explained that its working capital requirement had been penalized over the half-year by the “replenishment of integrated distribution stocks and by disruptions in the logistics chain linked to poor delivery conditions for rolling bases”. This led to an “increase in stock levels in motorhome factories well beyond the usual seasonality”, continues the company.

Towards a normalization of growth?

Concerning its prospects, Trigano indicated, in particular, that “the reconstitution of the stock of motorhomes by the distribution networks from which Trigano benefited during the first half of the year is now complete”. “The growth of Trigano’s activity should therefore come closer to that of its markets over the coming months, taking into account a potential adjustment of stocks in distribution networks,” adds the company.

“The group’s outlook perhaps sends a mixed message for the dynamics of the 2024-2025 financial year. But when we discuss with management, there is still a certain optimism on the state of demand, on the trade show activity, signs which suggest that there will be further growth in volumes next year,” says Arnaud Despré.

Trion Reid reiterated his advice to buy on value. “Cash generation has been weak, but working capital requirements should normalize at some point, the balance sheet and underlying cash generation remain strong, and the valuation is attractive and cheap, with calendar multiples of only 8 times expected profits and five times gross operating income.

Oddo BHF also confirmed its recommendation at “superformance”, equivalent to buying. The stock is trading, according to the broker, at only 4.6 times expected current operating profit for the current financial year, which “reflects the uncertainties over growth for the 2024-2025 financial year”.

But, implicitly, “this level of multiple would imply a downward revision of the estimated current operating income for 2024-2025 of at least 35%, which seems too pessimistic,” adds the broker.