PLY Analytics co-founder Vitalij \u0160ostak shared his assessment of \u201cModus Group\u2019s\u201d public bond offering and the company\u2019s latest financial results in comments to Verslo \u017einios.<\/p>\n\n\n\n
\u201cFrom a risk-return perspective, this year\u2019s offering appears significantly weaker compared to the 2023 placement. On one hand, we have a lower bond yield \u2013 pricing here is largely influenced by the general decline in interest rates \u2013 while on the other hand, debt metrics have deteriorated,\u201d argues V. \u0160ostak.<\/p>\n\n\n\n
In commentary, V. \u0160ostak highlights margin challenges: \u201cdespite increased revenue, in the first half of the year we see significantly lower margins and EBITDA of only EUR 12.5 million. This confirms trends visible in the financials of other major car dealers, for example, Tallinna Kaubamaja. The net profit line looks somewhat better than in the first half of 2024, but this is only due to certain financial engineering related to a change in the accounting method for the held Green Genius Int shares.\u201d<\/p>\n\n\n\n
V. \u0160ostak also points out the \u201cconsistently\u201d increasing net debt. By the end of the first half of this year, it had reached approximately EUR 120 million: \u201cthis figure excludes debts to related parties, which amount to around EUR 8 million. Accordingly, when all liabilities are taken into account, net debt already stands at approximately EUR 128 million. On the other hand, we have deteriorating operating results and, apparently, risks may materialize here due to the concentration of operations in a fairly cyclical business.\u201d<\/p>\n\n\n\n
\u201cThe company\u2019s short-term financial debt, excluding related parties, amounts to approximately EUR 53 million. Meanwhile, half-year EBITDA totaled around EUR 12.5 million. This may raise certain questions regarding debt servicing,\u201d assesses V. \u0160ostak. \u201cThis is not critical when the debt refinancing mechanism functions smoothly and, it should be emphasized, when the new and used car market is operating well, but these are essential conditions.\u201d<\/p>\n\n\n\n