StrongPoint - Strong growth in e-commerce continues
We expect strong a Q4 report (underlying estimates +2%) Strategic update to focus on fast-growing e-com business DCF value range of NOK 25-40/share We expect a strong Q4 driven by Norgesgruppen and e-com We expect Q4’20 to be a strong quarter, driven by the NOK 70m ESL delivery to Norgesgruppen (started in Q3, will finish in Q4) and good demand for the company’s e-commerce solutions. We forecast revenues of NOK 313m and EBITDA of NOK 27m. StrongPoint will also recognise two gains in the quarter (NOK 47m from the sale of the Cash Security segment and NOK 30m due to compensation from BaneNor), which means that EBIT and EPS will be unusually strong. As such, we forecast a pre-tax profit of NOK 94m.
We lower our estimates for ’20-22e due to the sale of the non-core, and non-growing Cash Security segment. From an underlying perspective, however, we have raised ’21-22e revenue and EBITDA by 2% due to strong momentum in the e-com business. Strategic update session to focus on e-commerce At the Strategic update session on 11 February, we expect the company to reiterate its NOK 2.5bn revenue target for 2025 as well as its EBITDA margin target of 13-15%.
However, we expect the company to say that it now expects a lot more growth to come from e-commerce. StrongPoint has signed fast-growing delivery platform Glovo as the first customer of the recently launched SaaS-version of its picking solution for e-com. The system will be used by grocery chains that deliver groceries through Glovo’s app.
Such a large technology company choosing StrongPoint’s technology is a strong testament to the quality of its software, in our view. This will also give StrongPoint a recurring and growing revenue stream (strongpoint is paid per order). We expect software to grow as a share of StrongPoint’s revenues in the years to come, which will mean an increasing share of recurring revenues and higher margins.
2025 targets imply EPS of NOK 5 (P/E of 5.5x, EV/EBIT 3.7x) At mid-point, StrongPoi....