Urb-it: It’s all about volumes – ABG

Q1 report due on April 28
We expect sales of SEK 12m and EBIT of -41m
Share trading at ‘22e-’24e EV/Sales of 8.2x-1.9x

Q4’21 was great in terms of volume growth…
Urb-it will report its Q1 results on April 28. In Q4’21, the company reported its highest sales ramp-up so far, growing sales 274% y-o-y and 114% q-o-q. However, the cost base was higher than we initially anticipated, much of which was one-offs stemming from lockdown-related disruptions in France and the UK, affecting the availability of couriers. Although we after the Q4’21 report increased our cost assumptions over our forecast period, we assume the sequential development from Q4 to Q1’22 to be more flattish, resulting in Q1’22e EBIT of SEK -41m (+5% q-o-q). Looking further ahead, however, we retain our view of a higher cost base, translating into Urb-it breaking even on the EBIT level in Q4’23e if it delivers in line with our estimates, where executing on operational leverage will play a crucial role.

… but we expect Q1’22 to be slightly on the softer side
As previously highlighted, the number of deliveries, and increasing these continuously, are key at this stage of Urb-it’s growth journey. While Q4 instilled confidence regarding this, we stress that Q4 is a seasonally strong quarter supported by several shopping weekends. Coupled with the fact that Urb-it has decided to end some of its partnerships that are not living up to its expectations, we adjust our initial view of sequential sales growth into Q1 to a deceleration, resulting in sales of SEK 12m (-23% q-o-q). Moreover, we lower our FY’22e sales by a hefty 26% and ’23e-’24e by 6% and 4%, respectively, as we fear that the volume drop from the terminated partnerships could take some time to compensate for, which foremost should affect 2022 numbers. Furthermore, we lower our ‘22e EBIT by ~6% due to additionally raising our cost base.

Fair value range lowered to SEK 2-9 (2-10) per share
The Urb-it share is down 21% YTD, and on our updated estimates is…
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