EU regulations drive demand for unique product

Strong cash position, margin expansion to come

Valuation range of SEK 3-12 per share

Growth story in the making
OrganoClick is a Swedish first-mover cleantech company that develops and produces functional materials based on environmentally friendly fibre chemistry. As such, the group is positioned at a sweet-spot of converging industry trends. With negligible competition and regulation-driven demand, OrganoClick is the natural choice for any supplier of non-woven fabrics. Additionally, the own-developed 3D-moulding technique used in its new BC segment has rendered three unique and sought-after niche products, including the Saga coffin produced in co-operation with Scandinavia’s leading coffin producer (~65% market share). We expect BC and NWT to drive a revenue CAGR of 37% ‘19-‘22e, 30% ’19-‘25e.

Margin expansion ahead, no need for further cash
The organisation is largely in place, and the new segments deliver significantly higher gross margins at equal or higher than 50% vs. the group average at 41%. As volumes appear from these segments, the margins will follow. We estimate an EBIT margin expansion from a loss-making ‘20 to 12% in ‘22e and ~24% in ‘25e, with further capacity investments being the main drag on the cash position (SEK ~50m today). We estimate cash break-even in ‘23e. We see no need for further cash given the company’s strong cash position.

Valuation range set at SEK 3-12 per share
We have constructed three different DCF model scenarios in which only the penetration levels of current production tests in the NWT segment are changed. With penetration levels between 20%-80% and a WACC of 11.4%, we arrive at a valuation range of SEK 3-12 per share. Furthermore, we have constructed NPV sensitivity tables for target multiples on EV/S and EV/EBIT (‘24e and ‘25e) using the same WACC. In ‘24e, with EV/S and EV/EBIT ranges of 1x-5x and 10x-30x, we arrive at valuation ranges of SEK 2.3-12.6 and 4.7-16.1 per share, respecti
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