Litium - Expect solid Q4, long-term outlook enhanced
Forecast 28. 5% ARR growth in Q4’20e to SEK 54m Strong underlying growth in e-commerce during ‘20 Fair value SEK 19-41 (14-35) per share We expect continued display of scalability in Q4’20e In terms of Q4’20e, we expect continued solid growth in ARR, factoring in 28. 5% y-o-y growth, at SEK 54m. We believe that Litium will benefit somewhat from the increased volumes in e-commerce in Q4’20e, although this is still a small part of overall revenues for Litium.
In terms of cost, we believe that Q4 will continue to highlight the scalability of Litium’s business model which we have seen throughout 2020, where we factor in an increase in opex of 7. 3% y-o-y, arriving at SEK -15. 6m.
We estimate that this will yield an EBITDA of SEK 1. 8m, for a margin of 10. 4%, and EBIT of SEK 0m.
Several positive read-throughs in Q4’20e Recently there have been several datapoints that highlight the strong underlying growth of e-commerce during 2020 and Q4’20. These might not affect Litium’s financials in the short term, as a minority of topline is driven by volume, but they speak to the long-term growth of e-commerce which will likely benefit Litium. The datapoints are: 1) PostNord released updated e-commerce figures for December 2020, where digital purchases increased ~50% y-o-y in December, and it expects ~33% total growth in 2020, 2) Nordic online fashion retailer Boozt pre-announced its Q4’20 figures, showing ~36% y-o-y growth, and 3) Jollyroom (a Litium customer) set a new record for November, with sales of SEK 300m, corresponding to 50% growth in the Nordics.
Fair value SEK 19-41 per share, EV/sales 8. 4-4. 9x ‘20e-‘22e We raise our fair value range for Litium to SEK 19-41 (14-35) per share, mainly driven by an adjustment of applicable peer multiples but also by a slight increase in our long-term growth expectations in our DCF valuation.
Our short-term financial estimates remain unchanged. At the current share price we find that Litium is trading at an EV/sales of 8. 4-4.
9x f.
