Goodbye Kansas Group - Strong market position creates great results - ABG

Rapid growth due to demand for Studio’s services We raise sales estimates by 6.6% for FY 2022e The share trades at EV/sales of 0.9x-0.8x for ‘22e-‘23e. Q1 sales grew 54% y-o-y, +27% above our expectations 2022 has started well for Goodbye Kansas Group, both in terms of sales and profitability. Sales grew 54% y-o-y (27% above our expectations) and EBITDA was positive at SEK 1.6m, while we expected SEK -1.7m. This good result is explained by the strong demand and the dominant position for Studios, the largest segment (93% of total sales in Q1). In the quarter, we visited the company in Stockholm and were very impressed by the equipment and technology in the studio. Moreover, the company announced five large orders during Q1 for a total value of SEK 58m. This is in line with the company’s strategy of taking on larger and longer contracts. Due to its prominent market position, the company can be more selective when signing contracts. Moreover, this also makes it easier for the company both to predict, and to some extend also stabilise, future revenues. Studios drives the estimates Due to the better than expected Q1 report and the positive market momentum that Goodbye Kansas currently has, we slightly raise our sales estimates for Studios by 8.2% for FY 2022e, which results in a 6.6% rise for the group. Moreover, we keep our expectations of a positive EBITDA in 2022e and we expect a positive result for all four quarters of the year. However, the EBITDA can fluctuate depending on new investments made in order to keep increasing profits. For this reason, we believe that single quarters this year could potentially have a negative EBITDA. Slightly raise our fair value range to SEK 0.5-2.4 per share With our estimate revisions, we slightly raise our fair value range to SEK 0.5-2.4 from 0.5-2.3 per share. The share is currently trading at EV/sales of 0.9x-0.8x for 2022e-2023e. Läs mer på ABG Sundal Collier

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