Pricer - Strong ESL market bodes well for a good Q4
Q4e: +180% sales growth and +227% EBIT growth y-o-y Underlying est. revisions up, but FX headwinds persist 23x 2020e EV/EBIT, 21% 2019-2022e sales CAGR Several data points suggest a strong ESL market in Q4 We believe that the ESL market has been relatively resilient to the second COVID-19 wave, and that market activity has remained high in Q4. For reference, ESL supplier E-Ink revealed expectations of a strong fourth quarter last November (driven by high demand for e-paper displays and ESL solutions), while both Pricer and its competitor SES Imagotag have recently announced several new orders. More specifically, Pricer has announced orders of SEK 157m, of which SEK 50m relates to PLUS and SEK 107m stems from a follow-up order from its existing customer, Best Buy.
Estimate changes On the back of the high activity, we increase our Q4 order intake forecast to SEK 396m from SEK 298m. Although we raise our underlying 2021-2022 sales estimates, recent FX movements offset most of these changes, resulting in a 1% hike in 2021-2022e sales. We keep our Q4 sales forecast of SEK 665m relatively intact, which corresponds to +180% y-o-y, driven by deployment of the previously received Best Buy orders.
Our Q4 EBIT forecast of SEK 78m is slightly reduced on lowered gross margin assumptions (due to higher freight costs) and higher opex forecasts (we believe that Pricer is currently prioritising growth over margins). Even so, we expect Pricer to deliver +227% EBIT growth y-o-y. Hard comps in 2021e, but Carrefour should contribute well Although Pricer faces challenging comps in 2021e (+74% growth in ‘20e), its financials will find support from further Best Buy order deployment as of Q2’21e.
In addition, we expect solid contribution from the framework agreement that was recently signed with Carrefour. However, the contribution in absolute terms is hard to assess, but we believe it will be visible in Pricer’s order intake in the coming quarters. Overall, we forecast 2021e ....