Generic - Ends the year in style, more to come in 2021

23. 6% y-o-y sales growth in Q4 Estimates up on higher growth assumption Försäkringskassan to start contributing in Q1 Q4: Net sales of SEK 22. 9m (18. 6m), +10% vs.

ABGSCe Generic reported Q4 net sales of SEK 22. 9m (+23. 6% y-o-y), 10% above ABGSCe.

We think Generic’s e-commerce customers were the main reason for the uptick in y-o-y growth we saw in Q4 relative to the other quarters, as the company benefitted from strong online Christmas shopping due to COVID-19. The lower gross margin of 49. 5% (59%) also points to a strong quarter in terms of variable income (higher volumes), as it is believed to have lower gross margins.

Adj. EBIT was SEK 3. 7m (3.

0) vs. ABGSCe at SEK 3. 0.

The deviation stems from lower-than-anticipated personnel. We note that 129 (124) new customer agreements were signed in the quarter, and management indicates that several of the new agreements were larger in size. Larger customer deals lead to positive sales revisions The strong growth momentum in conjunction with a positive development in new, larger customer agreements boosts our confidence in the growth outlook over the medium term.

We raise our sales estimates by 5-9% for ‘21e-‘22e as a result, but maintain our adj. EBIT margin assumption, albeit with lower assumed gross margins, offset by a lower opex-to-sales ratio. This all adds up to EPS revisions of 4-8% for ‘21e-‘22e.

Positive launch of Minicall+ In addition, Generic signals that the new generation of Minicall, Minicall+, has received positive feedback from its customers. We think this part of the business is smaller than messaging, and therefore less important for future growth, but it is obviously positive that the new service is being received well, as it should lead to upselling among established customers. We think Generic is well-positioned in a growing market going into 2021.

Försäkringskassan will start contributing to top-line in Q1, and that agreement has a yearly expected value of SEK 4. 5m. The s.