SPENN Technology: Funding is next on the agenda – ABG

H1 revenue somewhat below expectations
Lower ‘22e-‘24e EBIT mainly due to higher D&A
Uncertainty of outcome reflected in valuation range
H1 revenue below ABGSCe

SPENN Technology reported H1 revenue of DKK 70.3m. This was up from DKK 18.2m for the FY 2021, mainly driven by the consolidation of Kazang, which was acquired during H2 2021. The H1 revenue came in below our estimate of DKK 80m. While opex was largely in line with our estimate, D&A was higher than we had anticipated. This led to EBIT of DKK -30.3m vs our estimate of DKK -22m. At the end of H1, the company had approx. DKK 18m in cash.

Lower ‘22e-‘24e EBIT mainly driven by higher D&A
Except for taking into account higher-than-expected D&A and capex, we leave our estimates largely unchanged on the back of the H1 report. We continue to see significant market potential if SPENN is successful and find an unbanked population of +8.5m addressable users in current markets (~15m if we also include Uganda and Ghana). SPENN is also considering entering new markets, which could increase the target market further. It could also compete against other regulated financial services and the adult population in current markets points to a large market opportunity. However, we highlight that there is high risk related to the potential adoption of SPENN’s product offering, and that there continues to be high operational risk, regulatory risk, funding risk and dependency on a few key employees.

Fully diluted and de-risked fair value range of DKK 0-1.02
Our valuation range is based on a DCF scenario approach to reflect the wide range of potential outcomes. In scenario 1, SPENN successfully builds a large user base that it is able to monetise on, while in scenario 2, SPENN fails to profitably monetise on its customer base. These two scenarios imply a value range per share of DKK 0-1.02 on a fully diluted basis.

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