As 2022 ended on a high note for Motion Display, with deals signed in the USA, Germany and Australia, there are reasons to believe that 2023 could be a turning point after a rough couple of years. Supported by an underlying shift in sentiment and several trends pointing in the right direction, we remain optimistic that the company can push ahead to become a recurring part of retail brands’ in-store marketing strategy. We leave our fair value range intact at SEK 1.6 – 1.9 per share on a 12-24 month horizon.
Andreas Eriksson | 2023-02-24 08:00
Momentum in Q4’22 to carry on into 2023
Despite an overall tough 2022, Motion Display ended the year by signing three deals of a total of SEK 7.2m, two in the US and one breakthrough order in Australia, where global liquor giant Diageo placed an order of SEK 1.1m. With presence in 180 countries and 200 different brands in its portfolio, Diageo symbolizes the kind of customer that could take Motion Display to new heights should Diageo choose to allocate just a fraction of its in-store marketing spend to Motion Display. Diageo has placed several orders in the past, especially before the pandemic, and in light of the increasing importance of an active approach to the customer’s in-store shopping experience, we believe it is now ready to increase activity again.Sentiment moving in the right direction
2023 started like 2022 ended with two orders to the German market of a total of SEK 1.75m, one with a global purchasing organization which we believe will be of high strategic importance, since the organization represents a vast number of retail brands all over the world. As we saw eased Covid restrictions in most parts of the world in 2022, in-store shopping is now on track for a long-awaited return. At the same time, consumers are plagued by a rampant inflation and rising interest rates, again putting pressure on the retail industry. With sector colleague Pricer reporting sales growth of 28% in FY’22, we see mounting evidence that retailers are increasing their focus on creating even more value for in-store consumers and that Motion Display’s e-paper product has a valuable part to play in this.Big upside – high risk
Encouraged especially by the deal with the global purchasing organization we forecast sales to reach SEK 23m in 2023. The cost reductions made during H2’22 have shown results already, lowering FY OPEX to SEK 13.1m in 2022 from SEK 15.3m in 2021. This should have a positive impact on future profitability as the company should be able to grow topline a lot faster than OPEX. Should customer accounts like Diageo and PepsiCo decide to make Motion Display a recurring part of their marketing budget rather than one-offs, it would make the company very profitable. As the company Market Cap now amounts to a mere SEK 9m, below the current order backlog of SEK 10m, we believe the stage is set for a considerable revaluation should the company continue its positive news flow. As we forecast sales to grow to SEK 40m with an EBITDA of SEK 7m by 2025, our combined DCF and target multiple approach support a fair value of SEK 1.6 – 1.9 per share in 12-24 months.
DISCLAIMER
This commissioned research report is for informational purposes only and is to be considered marketing communication. This research does not constitute investment advice and is not a solicitation to buy shares. Information provided here or on Emergers’ website emergers.se is not intended to be financial advice. This research shall not be construed as a recommendation or solicitation to invest in the companies described. Emergers cannot be held liable for either direct or indirect damages caused by decisions made on the basis of information in this analysis. Investors are encouraged to seek additional information as well as consult a financial advisor prior to any investment decision.
This material is not intended to be financial advice. This material has been commissioned by the Company in question and prepared and issued by Emergers, in consideration of a fee payable by the Company. Emergers charges a standard fee for the production and broad dissemination of a detailed note following by regular update notes. Fees are paid upfront in cash without recourse. Emergers may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.
Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained herein represent those of the research analyst at Emergers at the time of publication. The company has been given the opportunity to influence factual statements before publication, but forecasts, conclusions and valuation reasoning are Emergers’ own. Forward-looking information or statements contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.
Exclusion of Liability: To the fullest extent allowed by law, Emergers shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained in this material.
No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Emergers’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in this material may not be eligible for sale in all jurisdictions or to certain categories of investors. Investors are encouraged to seek additional information as well as consult a financial advisor prior to any investment decision.
Investment in securities mentioned: Emergers has a restrictive policy relating to personal dealing and conflicts of interest. Emergers does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Emergers may have a position in any or related securities mentioned in this report, subject to Emergers’ policies on personal dealing and conflicts of interest.
Copyright: Copyright 2023 Incirrata AB (Emergers)
United Kingdom
This document is prepared and provided by Emergers for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the ”FPO”) (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.
This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.
United States
Emergers relies upon the ”publishers’ exclusion” from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Emergers does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.
