Q2 EBIT SEK -5m, -35.7% vs. ABGSCe

Divestment of Security segment yields SEK 40m

DCF range of SEK 2.16-8.88 per share (1.21-6.33)

Stable Q2, but story all about Dosell rollout
iZafe delivered Q2 revenues of SEK 4m, -10.4% vs. ABGSCe, for y-o-y growth of 24.3%. This shortfall vs. our estimates came down to our expecting a slightly stronger performance from the Security segment. Operational costs were mainly in line with our estimates at SEK 8m, +7.9% vs. ABGSCe, as iZafe displayed good cost control during the difficult COVID-19 period, utilising state-offered aid and furloughs. This ultimately yielded an EBIT of SEK -5m, -35.7% vs. ABGSCe.

Streamlining of operations and strength from Norway
The report was less about the above figures, and more about the divestment of the Security segment and the ongoing public tenders in Norway regarding Dosell. On 21 July, iZafe announced that it had divested its Security segment to AddSecure, receiving proceeds of SEK ~40m on a cash and debt free basis. We consider this a more than fair price given that the Security segmented generated revenues of SEK ~20m; more importantly, it grants iZafe some much-needed capital both for resolving interest-bearing debt of SEK ~10m, but also in order to finance operations until reaching positive cash flow. The rollout of Dosell in Norway is also making up substantial ground, with Doro Care AS having implemented a successful pilot study generating an initial order of ~50 Dosells, and where we see follow-up orders as very likely given that the pilot concerned 30 municipalities. iZafe is also participating, through Hepro AS, in Norway’s largest-ever public tender in terms of digital medtech equipment, which could generate orders for ~1,800 Dosells. Overall, we see substantial tailwinds for Dosell following COVID-19, which has highlighted deficiencies in Swedish and Norwegian elder care.

We raise our fair value DCF range to SEK 2.16-8.88 per share
Despite the divestment of the Security segment, we raise our
...

info@introduce.se (Introduce.se)

ABG Sundal Collier - Introduce.se