COVID-19 likely to impact 2020 underlying sales…

…but current order book will support 54% sales growth

Strong balance sheet, reliable partner

Q1’20 relatively unaffected, but we see risks in Q2-Q4’20e
In our last note on Pricer (24 February), we argued that COVID-19 would likely have a negative effect on the company’s order intake during 2020. Since then, the situation has taken a dramatic negative turn, and we think that Pricer’s financials will be hurt accordingly. Although our concerns about supply chain risks have been put at ease by Pricer’s recent press release (19 March), where the company saw only limited supply risks amid COVID-19; we now see that the largest short-term risk is on the demand side, with pilot projects likely to be postponed. Further, Pricer stated in the same press release that January-February had been good months in terms of order intake, which is supportive for Q1’20.

Reduced estimates due to COVID-19
Even so, we cut ’20e sales by 20% due to COVID-19. Given that Pricer ended 2019 with an order book of SEK 731m and has already announced orders of SEK 300m in 2020, we forecast FY sales growth of 54%. The order book mainly comprises Best Buy orders, which Pricer will roll out during Q2-Q4’20. Although we believe that Pricer’s underlying sales will decline by 29% in 2020 as retailers postpone their ESL instalments, we also believe that the company is well-positioned to capture strong underlying sales growth in ’21e, as retailers’ investment-willingness should return. Although we forecast strong growth in 2020, we believe that EBIT will decline by 31% y-o-y. This is a function of contracting gross margins (mainly due to price pressure and sales mix), and flat opex growth.

Well-capitalised, reiterates proposed DPS of SEK 0.80/share
Although we see lower EBIT in ’20e, Pricer finds comfort in its robust balance sheet in times like these. Its board of directors recently reiterated its proposed 2019 DPS of SEK 0.80/share, supported by its end-of-2019 net
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