Awardit: Restoring confidence with a strong Q2 - ABG

EBITA +77% vs. ABGSCe, 20% organic growth

Positive wording around M&A

Share trades at 9.4x EV/EBITA, 9% FCF yield on 2023e

Higher-than-expected profitability in Q2, outlook solid
Awardit delivered a strong Q2 with SEK 27.8m EBITA (+77% vs. ABGSCe SEK 16m). Organic growth was 20%. The strong reported EBITA margin of 14% (+5pp vs. ABGSCe 9%) was due to product mix, with a higher share of gift cards and goods sold from warehouses (vs. drop-shopping) fuelling a stronger-than-expected gross margin. The situation in Germany improved in Q1, according to management, with the firm able to offset cancelled campaigns from some clients with new business and Prämie back to budgeted levels in May and June. Looking into H2’22e, the risk of further campaign cancellations In Germany will likely persist, as the economic situation has not improved; note that as the business in Germany is more dependent on campaigns than in the Nordics, it can be more sensitive to economic fluctuations. EBIT was SEK 18.5m (+85% vs. ABGSCe SEK 10.0m), and net profit SEK 7.7m (+28% vs. ABGSCe SEK 6m). Cash flow was negatively impacted by a WC build of SEK 19m in Q2. As a result, FCF was only SEK 1.4m. Mgmt. also guided that Q3 has seen a solid start and that seasonality should be reminiscent of Q2. It also commented positively on the M&A outlook, saying that sellers are starting to adapt to new circumstances.

2022e adj. EBITA up 17% on the back of the Q2 report
We are encouraged by the strong profitability in Q2 but see no reason to adjust our forecast in H2’22e based on this. We already forecast Prämie to be back at budgeted levels, and although it has secured some new business, the risk will remain higher. By adding the higher Q2, we raise 2022e adj EBITA by 18% but leave 2023e and 2024e relatively flat.

Likely to restore some confidence among investors
With a strong Q2 report, we expect that Awardit will restore some of the lost trust in connection with the Q1 report. Looking ahead, the outlook for ...
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