Intesa Sanpaolo, in collaboration with Borsa Italiana and Euronext, organized an event in Paris in mid-October, where French and Italian investors met with 38 of our country's industrial excellences belonging to the Euronext STAR Milan segment.
Even in the first half of 2022, despite rising raw material and energy costs and supply chain inefficiencies, the aggregate revenues of STAR companies grew by 16.5% and the margin remained stable at around 13%, confirming their resilience and ability to react.
Estimates for the second half of 2022 see aggregate revenues growing by about 9% in the second semester and a margin in line with the first semester, while current estimates for 2023 seem challenging, with an expected growth of about 7% and a margin increase of about 60 bps. We think that a mild recession is likely for 2023, which would lead, according to our simulation, to a cut in 2023 aggregate earnings of STAR companies of between 30 and 40% from current estimates.
With such a cut in estimates, the STAR 2023 P/E would be broadly in line with its historical average. Therefore, we believe that current valuation levels of the FTSE Italia STAR index are already incorporating the effects of a mild recession in 2023.
[Source: Intesa Sanpaolo Research elaborations on FactSet]