Johan Widmark | 2024-05-08 08:00
Continued strong momentum
MODI reported a strong order intake of SEK 6.4 million in Q1, with approximately SEK 4 million in March alone, signaling continued strength throughout the summer months. Deliveries were concluded on an order from a large beverage customer in Q1, and with order backlog decreasing sequentially from SEK 9.2m in Q4’23 to SEK 6.3m in Q1’24, this suggests that investors should brace themselves for a slightly softer Q2. Interestingly, the strong result in Q1 was based on a larger number of orders from various countries and industries. The deepened collaborations with global procurement organizations, that serve as important gateway actors to the company’s customers, highlighted in Q4, should also help diversify revenues and accelerate growth going forward,
After some profit-taking share should have more to give
Liquidity continues to be a concern for the company. The increased order intake, combined with long payment terms from customers, while suppliers increasingly require payment in advance, puts a strain on liquidity for the company. But with cash at SEK 5.2m, another SEK 0.47m in checking account credit, a rights issue is not our main scenario in the coming 12 months. Our forecast is now based on sales of SEK 33m for 2024 and a 12% annual growth thereafter. With a long-term gross margin of 50% and a discount rate (WACC) of 23%, our combined DCF and target multiple valuation (1x sales’24) support a fair value range of SEK 1.9-2.3 per share, suggesting that the share has more to give.
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