Precise Biometrics
Precise Biometrics - Strong top-line growth (ABG Sundal Collier)
2020-05-19 12:22
Q1 sales SEK 23m, +89.9% y-o-y
We adjust our estimates for potential COVID-19 impact
DCF fair value range SEK 0.85-2.87 (0.94-2.93)
Q1 sales SEK 23m, EBITDA SEK 3mPrecise reported strong top-line growth in Q1, with sales coming in at SEK 23m (-7.0% vs. ABGSCe), for total y-o-y growth of 89.9%, driven by the mobile segment and Precise’s collaboration with EGIS Technology. The partnership with EGIS was extended after the quarter ended, and Precise will now be supplying optical sensors for several new Huawei smartphones. Revenues from the partnership are estimated to amount to SEK ~60m during 2020 according to management. Operational costs were SEK 20m (+2.5% vs. ABGSCe), with increasing R&D expenses associated with the development and commercialisation of the Digital Identity segment, which we believe will continue throughout ’20e. Reported EBITDA was SEK 3m, -15.1% vs. ABGSCe, for a margin of 13.2%. Reported EBIT amounted to SEK 0.1m, -89.1% vs. ABGSCe, for a margin of 0.6%.
Operations running despite COVID-19, Mobile could be affected
Precise’s operations in Shanghai, Potsdam and Lund are fully operational, with all offices remaining open despite COVID-19. That allows Precise to continue to focus on gaining market share in the optical sensor market, and to continue developing its Digital Identity offering. In the long-term we could see Precise experiencing increasing demand for its offerings due to COVID-19, especially in the Digital Identity segment, but also in the Biometric Smart Card segment when it launches. In the short-term we could see the Mobile segment being negatively affected, however, and we adjust our estimates accordingly.
DCF fair value range adjusted to reflect estimates
Following the Q1’20 report, and based on our updated estimates, we adjust our DCF fair value range to SEK 0.85-2.87 per share (0.94-2.93). Furthermore, we note that Precise is currently trading at an EV/sales of 4.9x-3.5x for ’20e-’22e, corresponding on average to 16% below our Nordic s
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