The eventful year of 2021 ended with 22% sales growth in Q4 and with a lot of hope for 2022. However, sales were 16% lower than we expected, due to less Royalty revenues (-44% vs ABGSCe), due to the component shortage among customers, which resulted in lower production volumes. Even though Q4’21 ended strongly, FY 2021 was challenging with -10% y-o-y sales growth (-12% organic). Moreover, Digital Identity had sales of SEK 4.7m in Q4’21, which is a strong increase from SEK 0.1m in Q4’20. The pipeline for Digital Identity looks very promising with pilot projects with EastCoast that will commercialise during H1’22. We continue to be very excited about the Algo segment, which entered the automotive market this year by signing two commercial licensing agreements to provide fingerprint technology in vehicles. These contracts drove the License revenues to a 75% y-o-y growth in Q4’21. The company delivered an EBITDA of SEK 1.7m in the quarter (SEK 0.7m in Q4’20). The EBITDA was primarily driven by the automotive customers, as well as the acquisition of EastCoast, which delivered revenues of SEK 2.1m, resulting in the best month of the year (consolidated in December). We remain confident about the expected revenue and cost synergies between Precise and EastCoast.
We slightly lower ‘22e sales and ‘23e gross margin
We slightly lower our sales estimates for 2022, as we expect initially lower royalty sales, resulting in a cut of -3% for the full year. Moreover, we lower our gross margin, resulting in a full year EBITDA cut of -4%. Our sales estimates correspond to a CAGR of 25% for ’21-24e.
Trading at EV/sales of 4.1x-3.6x for ’22e-’23e
On our new estimates, Precise’s share is trading at an EV/sales of 4.1x-3.6x for ’22e-’23e, slightly below FactSet consensus’ historical average of 4.5x NT
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