Raketech Group Holding

Country:
Sector:
Market cap (m):
Sweden
Media
SEK 303.79
Bloomberg:
Reuters:
Website:
RAKE SS
RAKE.ST
Share price (close):
SEK 8.12

Latest Reports

Commissioned Research: Good trading update for April
While Q1 was better than our expectations the most positive aspect of the report was the trading update for April stating monthly sales of EUR 2.4m, implying Q2 sales north of EUR 7m and ~25% growth y/y. We raise our fair value range to SEK 22-36 (18-34) per share on the back of our raised earnings estimates. At 2020E EV/EBIT of 3x, the stock continues to trade at a large discount to peers Better Collective (18x) and Catena Media (6x). Also. note that the company is debt free, unlike its two larger peers. Marketing material commissioned by Raketech Group Holding.

Commissioned Research: A stable start to 2020 after a challenging 2019
The January profit-warning took the air out of the Q4 report, which showed another steep revenue decline y/y. However, sequentially the business is flattening out and by Q2 we expect a return to y/y growth. We lower our fair value range to SEK 18-34 (22-35) per share on the back of lower margin assumptions. At 4x 2020E EV/EBIT, the stock continues to trade at a seemingly large discount to peers Better Collective (15x) and Catena Media (8x). Note that the company is debt-free, unlike its two peers, and with Raketech's new CEO Oskar Mühlbach stating that M&A is back on the agenda there are a lot of ways the business can be transformed in 2020.

Commissioned Research: Profit warning derisks the Q4 report
In mid-December, Raketech's board of directors decided it was time for a new group CEO, appointing COO Oskar Mühlbach. In January, this news was followed up with a Q4 profit warning stating that adjusted EBITDA would be ~25% below our estimate. We lower our fair value range to SEK 22-35 (32-41) per share on the back of large estimate cuts. At less than 4x 2020 E EV/EBIT, the stock continues to trade at a seemingly large discount to peers Better Collective (12x) and Catena Media (8x). Note that the company is debt-free, unlike its two close peers, and with the buyback programme halted some months ago, we assume M&A is clearly on the agenda for 2020. - Marketing material commissioned by Raketech Group

Commissioned Research: Sequential growth a small but positive sign
Online gambling affiliate Raketech's Q3 revenue of EUR 6.0m matched our estimate. Although this meant a revenue decline of 15% y/y, it also meant that revenue grew by 5% q/q, potentially marking Q2 2019 as the trough. It is worth noting that revenue-share contracts represented 56% of group revenue in Q3, up from 45% in Q2. We favour revenue-share income as it provides revenue visibility, but the shift away from fixed-fee income hurts revenue (and profits) short term; ie short-term pain for long-term gain. We trim our DCF-based fair value range to SEK 32-41 (33-42) per share. At 4x 2020E EV/EBIT the stock continues to trade at a seemingly large valuation discount to peers Better Collective (12x) and Catena Media (9x). Note that the company is debt-free, unlike its two peers, and with the buyback programme halted it is reasonable to assume M&A on the horizon.

Commissioned Research: Q3 unlikely to be the turning point
In Q2, online gambling affiliate Raketech slipped into negative organic growth, largely on the back of a tough market environment in Sweden. Based on tax data, business conditions have not improved materially over the last few months and so we find it unlikely that Q3 will be a turning point. We make no material estimate changes ahead of the Q3 report (due 21 November) and we stick to our DCF-based fair value range of SEK 33-42 per share. At 4x 2019E EV/EBIT the stock continues to trade at a seemingly large valuation discount to close peers Catena Media and Better Collective.

Commissioned Research: Valuation discount remains despite Q2 setback
Online gambling affiliate Raketech's Q2 numbers disappointed on the back of -9% organic revenue growth. This relates largely to Sweden, Raketech's largest market, where player values have declined following the new regulation introduced at the start of the year. However, based on trends so far in Q3 it is the company's assessment that player values will not decline further. We make negative estimate changes in this update, largely reflecting the Q2 miss. As a result, we trim our DCF-based fair value range to SEK 33-42 (35-44) per share after the Q2 report. Despite lower estimates it is worth highlighting that the stock still trades at a very large valuation discount to close peers Catena Media and Better Collective. These two stocks both trade above 10x 2019E EV/EBIT, whereas we find Raketech at ~4x. It should also be noted that Raketech was debt-free at the end of Q2.

Commissioned Research: Q2 expected to be similar to Q1
Online gambling affiliate Raketech reported a solid start to 2019 with no major deviations from our or consensus estimates for Q1. On the back of 22% organic growth, the group generated revenue of EUR 6.5m. Come Q2, we expect the company to deliver a similar revenue figure. Raketech's large exposure (~60%) to Sweden makes it difficult to generate sequential growth at this point, we argue. We make relatively small but negative estimate changes in this update. As a result, we trim our DCF-based fair value range to SEK 35-44 (36-45) per share ahead of the Q2 report.

Commissioned Research: A solid start to 2019 with 22% organic growth
Online gambling affiliate Raketech reported a solid start to 2019 with no major deviations from our or consensus' estimates for Q1. Revenues grew by 32% y/y, 22 pp of which was organic. The Swedish market, Raketech's largest by far, has yet to stabilise fully after the reregulation. With Q1 now behind us, however, the company has demonstrated that it can generate >50% EBITDA margins even with more than 50% of revenues from regulated markets. We make relatively small estimate changes and keep our DCF-based fair value of SEK 36-45 per share intact after the Q1 report. Marketing material commissioned by Raketech Group Holding

Commissioned Research: Temporary headwind turning to tailwind
Raketech is a fast-growing online gambling affiliate with a strong Nordic presence. It generates most of its revenue by funnelling new players to online casinos and sharing the profit. Because operators are determined to grow, this has become a lucrative business. Raketech takes an active part in consolidating the fragmented affiliation market, completing 22 deals since 2015. In 2018, it grew revenues by ~50% y/y, 30 pp of which was organic. There is some uncertainty about the net impact of re-regulation in its key market Sweden this year, but more established affiliates like Raketech will likely be the relative winners. Its trading update for January (+30% growth y/y), presented with the Q4 report, gave a comforting view. Marketing material commissioned by Raketech Group Holding

Equity analysts

Key persons

CEO: Michael Holmberg

CFO: Måns Svalborn

Chairman: Christian Lundberg

Numbers
Nordea
EURm
2016
2017
2018
2019
2020E
2021E
2022E
Total revenues
10.4
17.1
25.6
23.9
28.7
32.6
36.5
Ebitda (adj.)
8.07
9.67
14.40
11.33
12.49
15.17
17.53
Ebitda - margin
77.3%
56.4%
56.3%
47.4%
43.6%
46.5%
48.0%
EBIT (adj.)
8.0
9.0
12.7
7.1
7.0
9.0
11.0
EBIT (adj.) margin
76.9%
52.5%
49.7%
29.7%
24.5%
27.5%
30.0%
PTP (adj.)
8.0
6.3
6.3
6.1
6.3
8.8
10.8
Net profit from cont oper (adj)
7.64
5.95
6.06
5.89
5.89
8.26
10.13
Shareholders´ Equity
8.9
15.7
58.7
65.1
70.8
79.1
89.2
Net interest bearing debt
-0.1
25.0
0.4
-0.5
-6.3
-15.6
-32.4
Net gearing
n.a.
n.a.
n.a.
n.a.
-9.0%
-19.7%
-36.3%
Net debt/EBITDA
0.0
2.6
0.0
0.0
-0.5
-1.0
-1.8
Free cash flow to equity
0.0
-23.1
-5.3
2.7
5.8
9.2
16.8
Diluted number of shares in issue, year-end (m)
37.9
37.9
37.9
37.4
37.4
37.4
37.4
Nordea Markets estimates published on May 15, 2020
Source: Company data, Nordea estimates
Per share data and multiples
Nordea
EUR and %
2016
2017
2018
2019
2020E
2021E
2022E
EPS (adj.)
0.20
0.16
0.16
0.16
0.16
0.22
0.27
EPS (adj.) growth
n.a.
-22.1%
1.7%
-2.1%
0.6%
40.4%
22.6%
DPS
0.00
0.00
0.00
0.00
0.00
0.00
0.14
BVPS
0.2
0.4
1.5
1.7
1.9
2.1
2.4
P/E (adj.)
n.a.
n.a.
11.9
5.8
4.9
3.5
2.9
EV/Sales
n.a.
n.a.
2.83
1.39
0.79
0.41
-0.09
EV/EBITDA (adj.)
n.a.
n.a.
5.03
2.93
1.81
0.89
n.a.
EV/EBIT (adj.)
n.a.
n.a.
5.71
4.68
3.22
1.50
n.a.
P/BV
n.a.
n.a.
1.23
0.52
0.41
0.37
0.33
Dividend yield
n.a.
n.a.
0.0%
0.0%
0.0%
0.0%
17.5%
FCF Yield bef A&D, lease adj
n.a.
n.a.
-6.4%
33.9%
39.6%
50.3%
57.9%
RoE
n.a.
47.0%
12.2%
11.6%
8.5%
11.0%
12.0%
ROIC
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Nordea Markets estimates published on May 15, 2020
Source: Company data, Nordea estimates

Source: Thomson Reuters