GOMspace - Positive signals of being back on track
Record quarterly revenue We see greater upside to FY’21 guidance range Fair value range of SEK 8-46 maintained Solid Q4’2020 report GomSpace reported growth of 88% (ABGSCe 84%) in Q4, reaching its highest quarterly revenues ever, at SEK 72m (SEK 38m in Q4’19). This growth was supported by strong order intake, especially for the Science, Commercial and Defense segments. The report furthermore illustrated the benefit from the company right-sizing its operations to the current demand, as it reported a greatly improved gross margin of 33% in Q4 (up y-o-y from 10%), which was particularly impressive given that the “lower margin” business from the European Space Agency (ESA) accounted for the lion’s share of revenues. Conservative FY’21 guidance GomSpace gave FY’21 guidance of revenues of SEK 210-235m (ABGSCe SEK 232m), which we see as conservative, with greater potential for upside than downside.
We base this on the company reporting a strong order backlog of SEK 210m (up 37% from SEK 153m y-o-y). This backlog has been vetted by the company and only includes for orders that are very likely to be commercialized. The backlog includes customers such as the ESA (SEK 28m) and the Colombian Air Force (SEK 12m) and the time from order to revenue for the backlog is mainly under 12 months (with the exception of some science projects, which might spill over into FY’21).
However, with the strong backlog, new orders and the fact that the backlog does not include “risky” orders (which still have a chance of being commercialized), we estimate the company will reach the high end of guidance. Scenario valuation used due to unique industry While we see more momentum in “new space” M&A (with the recent acquisition of close competitor Blue Canyon for SEK 2.9bn by Raytheon , equalling an estimated 5.5x EV/sales, indicating GomSpace could be trading at a ~55% discount), we still lack some clear industry comparables/peers. We therefor continue to use a DCF scenario for our valua....