Urb-it: Seasonally softer with no drama - ABG

Sales -11% vs ABGSCe (SEK 10.9m vs ABGSCe 12.3m)
As we expected, Q1 came in seasonally softer…
… but volume ramp-up should continue from here

Sales up 124% y-o-y, EBIT down 193% y-o-y
Urb-it’s Q1 report came in below our expectations on both sales and EBIT. More specifically, Urb-it grew sales with 124% y-o-y to SEK 10.9m (-11% vs ABGSCe of SEK 12.3m), supported by a volume increase of 6x y-o-y. As expected, EBIT continued to decline, to SEK -43.7m, which is a drop by 193% y-o-y, and 7% below our expectations of SEK -40.9m. Regarding the cash flow, it continued to be affected by investments in cargo bikes to ensure the ramp up of delivery capacity. In total, SEK ~5.9m was spent on strengthening capacity in Q1.

Q1’22 report at first glance
In line with our expectations, Q1 was seasonally softer, which is reflected in sales declining by 32% q-o-q. Besides from the seasonality effect in Q1, we also believe that the sequential decline stem from Urb-it deciding to terminate some partnerships that were not living up to its initial expectations. On the other hand, we are positive on that the volumes should continue up from here with regards to its continuous expansion to new cities (e.g., Urb-it expanded to Birmingham, UK’s second largest city, and is planning to launch in Spain in Q3’22). Although EBIT continued to decline, we are pleased to see that the cost base, in line with our expectations, seems to have normalized from Q4’21’s high levels. Looking ahead, we believe that Urb-it should continue reaping the benefits from Europe’s increased focus on urban deliveries, both from regulators’ perspective, as well as from investors, corporates and consumers.

Currently trading at EV/Sales 7.2x-1.6x in ‘22e-‘24e
The Urb-it share is -30% YTD and is on our unrevised estimates trading at EV/Sales of 7.3x-1.7x in ‘22e-‘24e. On the back of today’s report, we expect consensus to make limited estimate revisions on both sales and EBIT.
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Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/urb-it/Equity-research/2022/4/urb-it---seasonally-softer-with-no-drama/