Inwit Does Things Its Own Way; Upgrades Guidance in Uncertain Times; Strong Downside Protection

Narrow-moat Inwit made a significant upgrade to mid- and long-term guidance during its second-quarter results. Inwit's previous business plan assumed inflation of 1.9% in 2022, which has now been increased to 6.5%. The 2023 inflation assumption remains at 1.9%, so there could be further upside to guidance if the current inflationary environment continues during the next year. We had already commented that Inwit is a clear beneficiary from the high inflationary environment, as its master service agreements are linked to the consumer price index with no caps and a 0% floor. Our forecasts were already above management’s previous guidance and are aligned with the new updated guidance, so we maintain our EUR 10.70 fair value estimate. In our view, Inwit is a good company for investors looking for strong downside protection during these uncertain times as it provides long-term cash flow visibility, upside from inflation, strong margins (68% EBITDA margins after leases in the quarter), and its infrastructure is critical. The updated guidance implies 2023 revenue and EBITDA (after leases) will be up to 4%-6% higher than the previous one.