Reverse split reduces Tecnotree's share volume and increases share price

Tecnotree decided last week at its AGM to carry out a reverse split, whereby 20 shares of the company will be exchanged for one share. The change took place on Friday after the close of trading and trading in the combined shares will start today. The number of shares in Tecnotree will decrease to approximately 15.95 million shares, including a small unpaid directed issue related to maintaining the number of shares in each shareholder's book-entry account divisible by 20. At the same time, the share price of Tecnotree will of course increase by a factor of about 20, but of course this purely technical change will have no impact on the value of investors' holdings or on the value of Tecnotree. Taking into account the reverse split, we have revised our target price for Tecnotree to EUR 7.00, which is exactly the same as the pre-split target price of EUR 0.35.

The main reason for the reverse split was the company's intention to pay dividends. The AGM authorized the Board of Directors to pay a small dividend of one cent (EUR 0.01) per share. The dividend represents a dividend yield of less than 0.2%, so the dividend has no practical significance for investors' returns. The absolute amount of the dividend (~EUR 160,000) is also very small and will therefore not have a significant impact on the company's financial position. Given the small size of the dividend, we believe the dividend is intended to signal the company's confidence in its financial position and future ability to generate cash flow.

We also added a small dividend to our forecasts. Tecnotree's Board of Directors will make a separate decision on the payment of dividends at a later date. The tentative record date for the dividend is September 24, 2024 and the tentative payment date is October 1, 2024.