Awardit: Continued stabilisation in sight - ABG

- Q1e: -2% organic growth, adj. EBITA +12% y-o-y
- We cut adj. EBITA by 13-4% on slightly lower sales and higher costs
- 8-5x EV/adj. EBITA and 8-12% FCF yields on '24e-'26e

Q1 expectations: muted growth and slightly weaker margins
Awardit is reporting its Q1 numbers on 7 May. We estimate SEK 273m sales for y-o-y growth of 23% (-2% organic, 1% FX, 24% M&A), mainly driven by the acquisition of IPO. Breaking down the growth, we expect continued positive growth for the core Nordic operations excluding MBXP in Denmark, driven by solid but slightly fading growth from existing as well as new loyalty programmes. We expect this to be offset by continued weakness in both MBXP (Denmark) and Prämie (Germany). We believe the situation in Denmark has stabilised and should improve gradually from lower levels, while Germany remains more challenging due to its more campaign-driven business. Moreover, we expect some cost savings from the cost savings programme, but see higher admin costs and inflation outweighing those gains. In addition, we also foresee a softer underlying gross margin related to a higher share of B2C sales (Eurobonus, movie tickets etc.) weighing somewhat on profitability. All in all, we expect a slightly lower adj. EBITA margin of 4.7% vs. 5.2% in Q1'23 and SEK 13m reported EBITA (+12% y-o-y) adjusted for ~SEK 3m expenses related to the bidding process.

Estimate changes
In terms of estimate changes, we trim sales by 1% while adding 3-1% higher opex on '24e-'26e based on a more conservative view on the cost savings. Because of this, we cut adj. EBITA by 13-4% on '24e-'26e.

Well-positioned for long-term growth and cash generation
The company maintain a strong cash position (SEK 195m by end-24e) and cash flow (SEK 99m FCF 2024e). Furthermore, we continue to believe that the company is well-positioned for long-term sustainable organic growth and to continue consolidating the market for loyalty and gift card services in Europe. The share is trading at 8-5x EV/adj. EBITA on our updated estimates.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/awardit/Equity-research/2024/4/awardit---continued-stabilisation-in-sight/