Avensia
Avensia - ABGSC Investor Days feedback (ABG Sundal Collier)
2019-12-05 15:30
Few signs of market deceleration
Increased complexity drives more strategic guidance
We estimate continued rapid growth ahead
E-commerce is a nice end-sectorAvensia CEO Niklas Johnsson presented at ABGSC’s Investor Days seminar today, concentrating mainly on the omni-channel strategy. Omni-channel refers to retailers’ presence across physical and online channels, and it is a niche driven by customers seeking improved retail experiences. In practical terms, it means that retailers must increasingly customise their value-propositions while maintaining fast and reliable user interfaces. This market is showing few signs of deceleration, says Avensia, and the market is reporting healthy growth in all geographies.
More than an IT consultant
Besides developing e-commerce solutions (websites etc.), customers demand strategic guidance, which is both costly and hard people to find. To address this demand, the company emphasised that it requires highly skilled personnel and close collaboration with customers. These are all attributes that Avensia possesses, which enables them to boost prices on its services while improving stickiness (around 80% of 2018 sales in 2018 came from existing customers).
Share is up 16% YTD, trading at 11x EV/EBIT on ‘20e
As is always the case with consulting companies, combining low turnover with high net recruitment is necessary to drive growth. In recent years, Avensia has been successful on both metrics, and we believe that this will continue. Although 2019 has reported slower growth and lower margin than the firm’s strong 2018, we estimate that Avensia will deliver 20% growth in 2020 combined with expanding margins on the back of its presence in an attractive end-market and strong track record. The current share price equates to 11x EV/EBIT and 15x P/E on 2020e.
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