Litium
Litium - Cloud-based platform, a retailer’s Nirvana (ABG Sundal Collier)
2019-10-02 06:56
In the top three Nordic digital commerce platforms
Scalable business model with 95% recurring revenues
Trading ~30% below peers on ’21e EV/EBIT of 13.3x
Diversified customer base with very low churnLitium is a software company that sells its cloud-based platform for digital commerce, Litium On Demand, through a scalable model where recurring revenues account for 95% of annual net sales. The company has established itself as a top-three player in the middle segment of the market in the Nordics, where customers face an initial investment of SEK 0.5m-3.0m. Litium’s broad customer base is composed of numbers roughly 250 B2B and B2C operators, where no single customer accounts for more than 10% of annual net sales and customer churn has amounted to 2-3% since 2012.
We estimate ’18-’21e ARR CAGR of 38.8%
Litium has three stated targets for ’21e: growing its annual recurring revenue (ARR) by at least 30% per year, achieving profitability (if it makes sense for the company’s shareholders), and establishing operations in one non-Nordic market. Looking at the company’s past performance, Litium grew its ARR by a CAGR of 44.8% in ’16-’18, and we believe the company’s growth target is well within reach. We estimate that ARR will grow by a CAGR of 38.8% in ’18-’21e, fuelled by e-commerce gaining market share in Sweden. That lays the foundation for faster-than-historical growth, along with Litium expanding to one non-Nordic market. We forecast that Litium will be profitable in ’21e: our estimates indicate an EBIT margin of 10.7%, driven by the scalability of the company’s business model.
Stock trading ~30% below peers, implied value SEK 11-27
Based on our estimates, Litium is trading approximately 30% below the median ’21e EV/EBIT of our key peer group. By utilising the lowest to the highest peer multiples for ’21e, we find an implied price range of SEK 13-19 per share. Our DCF valuation indicates a fair price range of SEK 11-27 per share, where we apply a WACC of 13.5% and set the termi
...
- Läs mer på Introduce
Läsaren av innehållet kan anta att ABG Sundal Collier har erhållit eller kommer att erhålla betalning för utförandet av finansiella företagstjänster från bolaget. Ersättningen är på förhand avtalad och är inte beroende av innehållet.
info@introduce.se (Introduce.se)
ABG Sundal Collier - Introduce.se