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Awardit: Short-term issues but long-term outlook solid - ABG

Q1 EBITA hit by temporary problems in Germany
Client activity in Germany to return to normal in H2’22e
Share trades at 14x-9x EV/EBITA on 2022e and 2023e

Sales and EBITA below expectations, but strong org. growth
Awardit delivered a Q1 report with strong organic growth (+40% y-o-y) and it said April had started well also, with organic growth up 33% y-o-y. But this was overshadowed by lower-than-expected sales from Prämie and a negative EBITA contribution from both Prämie and MBXP. For Prämie, the company said it lost SEK 15m of sales because of clients in the German energy sector temporarily pausing their loyalty programs to handle a series of bankruptcies in the sector, which has caused migrations and merges of customer bases and loyalty programs. When the clients have recalibrated, sales are expected to be back to normal, most likely in H2’22e. Total sales of SEK 167m in Q1 were 15% below ABGSCe. Reported EBITA was SEK 5.0m (SEK 6.6m) but SEK 9.1m adjusted for one-offs, vs. ABGSCe of SEK 24m. Margins were primarily hurt by lower volumes in Prämie, seasonality in MBXP and a one-time write-off of a receivable. The EBITA margin adjusted for one-offs was 5.4% vs. 10.1% in Q1’21, and ABGSCe of 12.4%. The organic EBITA margin adjusted for one-offs was 13.3%, +2.7pp y-o-y.

Estimate changes: ‘22e-‘24e EBITA -25%, -10% and -6%
Excluding organic growth, which beat out expectations, the report was weak. But we see incremental improvements in profitability in Q2 and a return to normal levels in H2’22e when we expect the German energy firms to resume their loyalty campaigns. Not much has changed in our long-term view, but we cut 2022e adj. EBITA by 25% because of the short-term issues, and one-offs in Q1, and 2023-24e adj. EBITA by 10% and 6% on lower growth and profitability expectations in acquired units.

New fair value range of SEK 180-350 (230-430) per share
We have changed our fair value range to SEK 180-350 (230-430) per share on lower estimates. We als ...
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