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- Verkkokauppa.com - Guidance downgrade by surprise
Verkkokauppa.com - Guidance downgrade by surprise
Guidance downgraded for adj. EBITDA
Verkkokauppa.com downgraded its guidance yesterday and gave preliminary figures for full-year revenue and adj. EBITDA. FY18E revenue was EUR 477m, in line with the guided range of EUR 460-500m and somewhat above EUR 467-468m Evli and consensus estimates. However, adj. EBITDA landed at EUR 10.2m, below previously guided range of EUR 11-14m and below EUR 12.7m Evli and cons expectation. Full-year figures imply Q4 revenue of EUR 155m (growth 22%) and adj. EBITDA of EUR 3.4m (EUR 5.9m y/y). Adj. EBITDA for Q4 thus lands at its lowest level since 2014. Seasonally strong Q4 has thus clearly disappointed. Tight price competition and higher marketing costs were mentioned as negative contributors in 2018E.
We expect wholesale volumes to have increased y/y in Q4
Federal Customs Service of the Russian Federation announced on Dec 7th that starting from Jan 2019 the duty-free limit for private goods imports will be reduced to EUR 500 from EUR 1000 previously. We expect this to have supported wholesale volume sales for Verkkokauppa.com in Q4 and consider this as a likely contributor to the Q4 revenue beat.
Estimates cut - target price to EUR 4.2 (4.7)
We have cut 2019 and 2020E estimates by 12% and 9% respectively. We continue to expect a growing dividend of EUR 0.19 vs. EUR 0.18 for 2017. This represents 122% of EPS, but can be backed by the sizeable net cash position. We cut target price to EUR 4.2 (4.7), which corresponds to 12x 2019E EBIT. Our “Hold” rating is intact. Our estimates do not yet reflect the upcoming IFRS 16 changes.