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Financial overview

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Netum - Growth in good shape

25.08.2021 | Company update

Netum grew faster than expected in H1 but otherwise showed little other surprises. Deal flow and growth in headcount provide good support for continued clear double-digit growth. We retain our HOLD-rating and adjust our target price to EUR 4.6 (4.4).

Growth surpassed expectations, no larger surprises
Netum reported its H1 results, which all in all were slightly better than expected. Revenue grew organically at a good pace of 21.7% to EUR 10.4m (Evli EUR 9.8m). The comparable EBITA grew to EUR 1.6m (Evli EUR 1.5m). The comp. EBITA-margin declined slightly y/y to 15.4% (H1/20: 17.2%), which can be largely explained by significant new recruitments. The company’s IPO had a negative impact of EUR 0.9m on earnings figures and the comparable EPS was at EUR 0.12 (H1/20: 0.15).

Growth prospects looking good
Netum has been very successful in new recruitments and the personnel grew by nearly 50% y/y to 171. As such the company has been able to manage profitability well given the quite minor dip in relative profitability. The deal flow has been good, including several significant long-term contracts, which with the success in recruitments should support growth remaining well in the double-digits in the near-term. The for Netum strategically important cyber security business was made a separate business area at the start of the year and has according to the company performed well, which in terms of relative growth has been a driver in our growth estimates. We have made minor, relatively insignificant upwards adjustments to our near- to mid-term estimates. Our 2021 estimates for net sales and comp. EBITA of EUR 21.6m and EUR 3.4m remain quite near the top of the company’s guidance of 2021 net sales and comp. EBITA of EUR 20-22m and EUR 3.1-3.5m respectively.

HOLD with a target price of EUR 4.6 (4.4)
In light of our minor estimates revisions and the good first half of 2021 we adjust our target price to EUR 4.6 (4.4). Our target price values Netum at approx. 20x 2021 adj. P/E (excl. IPO expenses and goodwill amortization). We retain our HOLD-rating.

Netum - Good profitable growth

24.08.2021 | Earnings Flash

Netum’s H1 was slightly above our expectations. Net sales grew 21.7% organically to EUR 10.4m (Evli EUR 9.8m) while the comparable EBITA amounted to EUR 1.6m (Evli EUR 1.5m). Netum reiterated its 2021 guidance, expecting net sales and comparable EBITA in 2021 to amount to EUR 20-22m and EUR 3.1-3.5m respectively.

  • Netum’s net sales in H1 amounted to EUR 10.4m (EUR 8.6m in H1/20), slightly above our estimates (Evli EUR 9.8m). Net sales in H1 grew 21.7% y/y, of which all was organic growth.
  • EBITDA in H1 was EUR 1.9m (EUR 1.5m in H1/20) and comparable EBITA EUR 1.6m (EUR 1.5m in H1/20) in line with our estimates of EUR 1.8m and 1.5m.
  • Operating profit in H1 amounted to EUR 1.3m (EUR 0.9m in H1/20), slightly above our estimates (Evli EUR 1.1m), at a margin of 12.0%.
  • Comparable earnings per share was EUR 0.12 (H1/20: 0.15)
  • Personnel at the end of the period amounted to 171 (116).
  • Netum completed its IPO in June and was listed on the Nasdaq First North Growth Market Finland marketplace. Listing expenses affecting comparability amounted to EUR 0.9m.
  • Guidance reiterated: Netum expects its net sales to grow to EUR 20-22m and its comparable EBITA to amount to EUR 3.1-3.5m in 2021.

Netum - Initiate coverage with HOLD

08.06.2021 | Company report

Netum is a Finland-based strongly growing and profitable IT services company with over 20 years of experience of demanding IT projects. The company seeks to grow sales to EUR 30m by 2023 (20% p.a. implied) while maintaining an EBITDA margin of above 15%. We initiate coverage with HOLD and a target price of EUR 4.4, valuing Netum at approx. 18.4x 2021e adj. P/E.

Strong track record of profitable growth
Netum has been growing strongly in the past years, through both organic growth and M&A, with a CAGR of 22% in 2016-2020. Strong growth has been coupled with high margins as the average EBITA and EBIT margins between 2016-2020 have been 16.7% and 11.4% respectively. Both growth and profitability have been above the average level of Finnish competitors.

Proceeds from the IPO will be used to accelerate growth
Netum aims to grow rapidly organically and according to its financial targets, the company aims to achieve net sales of EUR 30m in 2023, which corresponds to 20% annual organic growth. In addition to organic growth, the company is actively looking for opportunities for inorganic growth and seeks to grow through selective acquisitions, aided by funds raised in the recently completed IPO. A core part of Netum’s strategy is to continue to achieve a good level or profitability while growing, and the target is to achieve an EBITDA margin of at least 15%.

HOLD with a target price of EUR 4.4
We initiate coverage of Netum with a HOLD-rating and target price of EUR 4.4. The share price rose clearly after the IPO and current valuation multiples are rather in line with the Finnish peers. In our view, Netum’s strong track record of growth, relatively high net sales/employee ratio and above-average profitability could even warrant a premium to our peer group. On the other hand, Netum’s smaller size, competition for skilled employees, concentrated customer base, and intensifying competition are factors to be taken into consideration when looking at valuation.

Annual and sustainability reports

Company news

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Company Facts

Guidance

Netum estimates net sales to increase to EUR 20-22m in 2021. Comparable EBITA is estimated to be EUR 3.1-3.5m in 2021.

Financial targets

Growth: net sales of EUR 30m in 2023. Profitability: above 15% EBITDA-margin

Share price (EUR)


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