Netcompany: Short-term pain for long-term gain - Nordea

Netcompany's Q2 report was a mixed bag with the key question being whether it was more important that the UK and Norway had started to show their potential or that Denmark's profitability was under pressure (albeit for long-term strategic reasons). The poor profit performance was clearly a negative surprise, but in terms of the equity story, we believe it was outweighed by the strong performance by the UK and Norway. The increase in the number of employees (23% y/y) and improvement in revenue visibility (23% y/y) suggest revenue will exceed FY guidance (H2 top end of sales growth guidance: ~17.5% y/y). We trim our EBITA estimates, but our DCF- and peer-group based valuation range is up slightly to DKK 655-760 (645-745) due to peers trading at higher margins. Marketing material commissioned by Netcompany.

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