Napatech delivered Q4 sales of DKK 55m, up 5% y-o-y (2% adj. for FX). Q4 was hit by indirect supply chain issues (mainly due to delayed server deliveries among end-users) and the USD 1-2m pilot order from the Lenovo deal being deferred. Going into 2022, we expect some of the server delivery postponements to also affect Q1 and estimate that sales will be slightly down q-o-q. Consequently, we forecast Q1 sales of DKK 53m (up 13% y-o-y and up 6% adj. for FX) and EBITDAC of DKK 1m.
Minor changes to long-term estimates
In Q4, Napatech guided for 2022 revenue of USD 37m-41m, translating into DKK 235m-260m, i.e. a midpoint of DKK 248m, which is in line with our estimate DKK 247m. Consequently, we leave our annual sales estimates largely unchanged. Furthermore, the company guides for an EBITDAC in 2022 of DKK 13m (on a midpoint basis). As we had expected somewhat higher costs, we lower our opex estimates slightly. However, overall, our estimates remain largely unchanged. Note that our ‘22 estimates factor in limited contributions from potential Virtualisation orders (first order expected in Q4 2022). Consequently, if the Virtualisation opportunity proves successful earlier in 2022, there should be an upside to our estimates.
Peers point to share price of NOK 6-17
Hardware-enabled software companies trade at an EV/Gross Profit of 6.6x and 4.6x in ‘21 and ‘22e. Pricing Napatech in line with this peer group points to a share price of NOK 12-15. Profitable Nordic peers trade at an EV/EBITDA-capex in ‘23e of 15.4, This implies a share price of NOK 6. Note however, that we expect Napatech to continue to improve margins from ‘23e onwards and by pricing in a normalized EBITDA-capex, we arrive at a fair share price of NOK 17. Our DCF points to a fair share price of NOK 16. Overall, we arrive at a fair share price ran ...
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