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- Verkkokauppa.com - Back to double-digit growth
Verkkokauppa.com - Back to double-digit growth
Back to double-digit growth, as expected
Verkkokauppa.com returned to double-digit 11% revenue growth in Q3, after only 3% growth in H1. Growth was in line with expectations. Wholesale volumes were broadly flat as guided and no longer provided headwind as in H1. Revenue growth is guided to continue at a stronger level in Q4 than in H1. We expect revenue growth of 15% in Q4, supported by both Raisio and underlying growth.
Surprisingly strong GM despite tightening competition
Verkkokauppa.com’s earnings beat in Q3 was fully driven by the gross margin, which improved to 14.9% from last year’s very low level of 13.2%. We expected 14.3%. Stronger than expected margin improvement came despite competition tightened from Q2 as we expected. The company responded to increased campaigning by competitors as expected, but managed its campaigns more efficiently and had better terms with suppliers. Also, a part of the actions to boost sales was marketing, which was visible in OPEX.
“Hold” with TP of EUR 4.7 (4.5)
Our estimates are slightly up for Q4 and FY19-20E after the Q3 report. On our base case estimates Verkkokauppa.com trades 14x,11x and 10x EV/EBIT in FY18-20E. We see valuation as fairly neutral at present and hence retain “Hold” rating with TP of EUR 4.7 (4.5) for the shares.