Pricer - Strong momentum to continue in Q2
Q2 report due Tuesday, 20 July We expect sales +34% y-o-y and orders +25% y-o-y 29-21x ’21-‘22e EV/EBIT Positive news flow – we expect a good Q2e Pricer’s momentum continues to be strong, with several new agreements announced over the past months. Coop Norge has signed a new framework agreement with the company (est. value of SEK 140m), a Norwegian specialty chain has placed an order of ~SEK 22. 5m through its partner Strongpoint, and Best Buy Canada has decided to use Pricer as its ESL supplier, a contract valued at SEK 57m and covering 129 stores.
Furthermore, we have recently seen reports that Pricer supplier E-Ink is saying that demand is good (source: Taipei Times). However, it also says that demand is greatly exceeding what the company can supply, which highlights the industry’s distressed supply chain. Q2e: strong orders, but supply chain to burden sales Owing to its strong market position, we think that Pricer will be able to capitalise well on the strong market.
That said, the industry’s supply chain continues to be distressed, and we therefore anticipate that orders will look better than reported sales. Owing to this, we have revised our gross margin assumptions for H2’21e downwards, with a -3% decline on our ‘21e EBIT. We expect Q2 sales and orders of SEK 386m (+34% y-o-y) and SEK 404m (+25% y-o-y), respectively.
Although we see increased COGS due to inflated freight rates and higher component prices, we forecast gross margin levels similar to Q1 on an improved sales mix (i. e. a lower share of Best Buy-related sales).
In terms of EBIT, we expect SEK 19m for a margin of 4. 9% (vs. 1.
2% in Q2’20). 21x 2022e EV/EBIT, 20% 2019-2023e EBIT CAGR After a strong share price run in H2’20, Pricer’s share is down -17% YTD vs. OMXSALL at +24%.
On our new estimates, we see a valuation of 29-21x ’21-‘22e EV/EBIT.
