Precise Biometrics: Short-term component shortage pressure - ABG
Q1 revenues of SEK 19m for y-o-y growth of -20.9%
Precise Biometrics’ Q2’21 report was below our estimates in terms of revenues due to the global component shortage resulting in lower-than-expected royalty revenues. EBITDA, however, was more or less in line with expectations. Net sales were SEK 19m, -9.3% vs. ABGSCe, for y-o-y growth of -20.9%, mainly driven by lower royalty revenues of SEK 7m, -31.3% vs. ABGSCe, with the miss due to lower production volumes from Precise’s customers. The company indicates, however, that it sees good prospects of returning to earlier volumes even if the component shortage continues. An even more important factor, in our view, is the continued strong performance of Precise’s Digital Identity segment, where management reports growth of 169% in Q2. This is likely from very low levels, but is still a sign of strength. Given that the Digital Identity segment utilises a SaaS business model, it will result in stable recurring revenues with a healthy margin over time and as it scales. Lastly, Q2 EBITDA was SEK -0.8m, slightly below ABGSCe at SEK -0.4m
Component shortage drives estimate changes
We lower our sales estimates for ‘21e-‘23e by 11-3%. This is mainly driven by the Q2 report, which was below our estimates, but also by our lowering our growth assumptions for Q3e, as the global component shortage is likely to continue to pressure royalty revenues. We now forecast Q3e revenues of SEK 20m for y-o-y growth of -14.0%, vs. our previous estimate of SEK 27m. We factor in a slight recovery in Q4e, but there is a high degree of uncertainty on when the component shortage will abate.
DCF fair value SEK 0.72-2.60, EV/sales 4.5x-3.3x ’21e-’23e
Following our estimate changes, we make slight adjustments to our DCF fair value range, which now indicates SEK 0.72-2.60 (0.76-2.77) per share. Additionally, we find that at the current share price, Precise is trading at an EV/sales of 4.5x-3.3x for ’21e-’23e, approximately 55% below the average EV/sales of our Nordic Software peer group based on FactSet consensus.
Länk till analysen i sin helhet: https://www.introduce.se/foretag/Precise-Biometrics/Equity-research/2021/8/precise-biometrics---short-term-component-shortage-pressure/
