Urb-it: Wheels are turning to reach profitability - ABG

Q2 report due August 18 We expect sales of SEK 13m and EBIT of -36m Share is trading at ’22e-’24e EV/Sales of 10-2x Market headwinds with focus on qualitative volumes…

Coming from several quarters of strong top-line growth, Urb-it is facing a market characterised by macroeconomic worries with declining e-commerce sales, negatively impacting the underlying demand for its services. Adding to this, we expect that the company has continued with its strategic decision, started in Q1, to close partnerships that yield low volumes and poor margins. Nonetheless, we expect the expansion to continue, albeit it in a more focused and careful way with the company continuing to enter new markets (most recently in Liverpool and Birmingham, with Madrid and Barcelona coming in Q3’22). Considering the aforementioned factors, we forecast sales to continue growing on a q-o-q basis to SEK 13m (+19% q-o-q, 119% y-o-y), alongside EBIT of SEK -36m, up from SEK -44m in Q1’22.

…and more focus on profitability going forward Urb-it expects that urban access regulations, putting restrictions on deliveries with vans, will start to be implemented in several European cities in the coming three years. This trend, together with Urb-it being a certified B Corporation using only e-cargo bikes, adds to the company’s competitive advantage as a sustainable choice for last-mile delivery. Moreover, we estimate that partnerships with larger vendors such as Amazon and Alibaba will add better geographical density. In turn, this should ensure more deliveries per hour, driving margins higher. On the back of the recent exited contracts and a softer market outlook, we lower our sales estimates by 21-27% for ’22e-’24e. Given the low margins on the cancelled contracts, we make relatively minor changes to our earnings ests. in absolute terms, cutting EBIT by SEK 3-11m in ’22-24e.

Fair value range lowered to 1.5-7.0 (2-9) per share The Urb-it share is down 26% YTD, and on our updated estimates is trading at ‘22e-’24e EV/Sal ... Läs mer på ABG Sundal Collier

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