Verkkokauppa.com - Expecting good Q1 figures

Verkkokauppa.com reports its Q1 result on this week’s Friday, 23rd of April. We have made small estimate adjustments and expect Q1 sales to grow by 7.5% y/y to EUR 135m. We expect adj. EBIT of EUR 5m. We retain our rating “BUY” with TP of EUR 10.5 (9.5).

We expect sales growth of 7.5% in Q1

We expect Verkkokauppa.com to report strong Q1 figures on Friday. The coronavirus situation remained severe during the first quarter and due to the restrictions people have stayed more at home. This should continue to support online sales, benefiting Verkkokauppa.com. Additionally, most of Finland had a proper winter which we expect to boost sales of sport and outdoor equipment. Lower level of wholesale sales should also have a positive impact on gross margin. We have slightly increased our H1’21E estimates ahead the Q1 result. We expect Q1’21E sales to grow by 7.5% y/y to EUR 135m (cons. EUR 134m) while we expect adj. EBIT of EUR 5.0m (cons. EUR 4.8m).

Domestic purchases are expected to remain high during ‘21

The coronavirus situation has prolonged and even though the Finnish population is currently being vaccinated the pace is slow and it will take a while to get back to normal life. We expect the situation to normalize towards the end of the year, but we expect that for instance traveling abroad will remain in a low level throughout 2021. Thus, consumption will continue to be more focused on domestic purchases, supporting 2021 sales. The company introduced its refined strategy for 2021-2025 earlier this year and it targets to reach sales of EUR 1bn and EBIT margin of 5% by the end of 2025. We expect the company’s good momentum to continue with 21E-23E sales growth of 6-7% and adj. EBIT margin of ~4%. We however highlight that the competition is likely to continue tight after the pandemic thus profitable growth doesn’t come easy.

We keep our rating “BUY” with TP of EUR 10.5 (9.5)

We expect 21E sales to grow by ~7% to EUR 594m (cons. EUR 592m) and adj. EBIT of EUR 23.6m (cons. EUR 23m). On our estimates, the company trades with 21E-22E EV/EBIT multiple of 16.8x and 15.6x, which is 17% discount compared to the online-focused Nordic and European peers in 21E and 11% premium in 22E. We keep our rating “BUY” with TP of EUR 10.5 (9.5).

Open Report