SPENN Technology: Business plan intact, but funding is needed - ABG
We expect DKK 80m in H1 2022 Sales
Significant market potential if SPENN is successful
Uncertainty of outcome reflected in valuation range
Low cash position and funding needed in Q3
Going into 2021, we expect SPENN Technology to deliver revenues of DKK 80m, driven by Kazang. According to the company, the Kazang and SPENN business segments have performed well in H1 2022, while SPENN Consumer has seen a somewhat lower focus. Following the H2 2021 report, we make only minor changes to our cost assumptions. Consequently, we forecast an EBITDA for H1 2022 of DKK -20m. As of the end of H2 2021, the company had DKK 16m in cash. Consequently, the significant funding risk remains a factor and we expect SPENN to raise capital during Q3. We also highlight that there continues to be high operational risk, regulatory risk and dependency on a few key employees.
Significant market potential if SPENN is successful
We find an unbanked population of +8.5m addressable users in SPENN’s current markets. If we also include Uganda and Ghana, there are ~15m unbanked potential users. SPENN is also considering entering into new markets, which could increase the target market further. It could also compete against other regulated financial services and the adult population in current markets points to a large market opportunity. However, we would like to highlight that there is high risk related to the potential adoption of SPENN’s product offering.
Fully diluted and de-risked share price of DKK 0-1.02
Our valuation range is based on a DCF scenario approach to reflect the wide range of potential outcomes. In scenario 1, SPENN successfully builds a large user base that it is able to monetise on, while in scenario 2, SPENN fails to profitably monetise on its customer base. These two scenarios imply a share price interval of DKK 0-1.02 on a fully diluted basis.
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