OrganoClick - Right on time (incl. the academic quarter)
No drama in Q4 report Large NWT order has arrived Value range raised to SEK 5-16 (3-13) per share NWT order worth SEK 30m p. a. – better late than never On Friday, 19 February, OrganoClick announced the first high-volume NWT order we have been waiting for, and which was supposed to come during H2’20. OrganoClick is going to deliver its bio-based binders to a leading non-woven producer.
The deal value is estimated to be c. SEK 30m annually once fully implemented, which is expected to happen during 2022. During 2021, the company is going to deliver volumes worth SEK 5.
2m for the period Q2-Q3, with Q4 still unknown. We see this as an important proof-of-concept win that materially lowers the NWT risk. Furthermore, this could boost confidence among the counterparties in the company’s other nine production tests currently in place.
We note that applying the order value on this order to the current production tests would imply sales of SEK 300m, a gross profit of c. 150m and an EBIT of c. SEK 60m from the NWT segment, according to our estimated margins.
No drama in Q4, changes look more severe than reality The company’s Q4 report (announced 17 February) came in line with our expectations with SEK 18m in sales (0% vs. ABGSCe) and EBIT of -9m (-4% vs ABGSCe). On a segment basis, FW came in 11% above our expectations while GCM came in 5% below.
BC again fell short of our expectations. We make estimate cuts of 16-8% to sales, effectively delaying financials by one year. This is partly due to a BC cut (c.
5% group ‘22e impact) due to weaker-than-expected performance, while delaying sales in NWT on longer process timelines. As we now have indications of approximate deal sizes, we pencil one more deal into our ‘22e numbers, with two more deals set to come during ‘23. Keeping in mind that the firm is in nine production tests, our NWT est.
changes do not affect our view of the segment’s value, as they mostly impact 2021e. Value range increased on de-risked NWT segment On.
