Tecnotree: Growth money does not come for free
Tecnotree's Q1 figures exceeded our expectations in terms of revenue and earnings. The company was successful in repatriating cash flow but after abundant investments cash flow was in the red. The convertible bond announced by the company on the report date stole the focus. The bond will significantly dilute the share capital within five years. The sensibility of the financing arrangement for shareholders ultimately depends on capital allocation. We expect that the company will use capital for M&A transactions where the company currently sees many opportunities. With the recent share price rise, the valuation of the share seems neutral in the next few years on a cash-flow basis.