CentralNic analyst Zeus “see room for significant earnings upside”

CentralNic Group plc (LON:CNIC) published Adjusted EBITDA slightly ahead of previously flagged estimates. The Online Marketing division grew 83% organically, up from 65% growth in 2021. Divisional KPIs indicate both volume and pricing growth remain strong. As the company scales, quarterly margins have steadily risen to levels ahead of our full year estimates. At the same time, cash conversion and net cash were strong and we believe are tracking ahead of our forecasts. The company’s strong Q1 performance makes full year earnings expectations appear conservative. By simply annualising Q1 EBITDA and adjusting for the VGL acquisition, we estimate EBITDA could reach $80m, 19% above our forecast of $67m. Even based on our conservative forecasts CentralNic trades at only 7.5x 2022 EBITDA, 10x P/E and 10% FCFF yield.

¨ EBITDA slightly ahead and strong divisional performance: CentralNic published Q1 Adjusted EBITDA slightly ahead of the level flagged in its April trading update ($18.5m v c. $18m) and reported organic revenue growth of 53%. Organic growth was again led by outstanding growth of the Online Marketing division (83%), with the Online Presence division delivering substantial growth (7%). The Online Marketing division increased the number of visitor sessions by 54% and increased revenue per thousand sessions (RPM) by 104% yoy.

¨ Continued operating leverage could drive margin outperformance: EBITDA/ Net revenue margins have been consistently trending up every quarter from 36% in Q1 2021 to 46% in Q1 2022, demonstrating operating leverage benefits that we have conservatively not factored into our 2022 margin estimate (42%).

¨ Potential net debt outperformance: Cash conversion and ending net cash were both strong and appear on track to outperform our estimates, even if we assume only 50% net cash conversion of EBITDA over the remaining three quarters of the year.

¨ VGL and acquisition outlook: The VGL acquisition appears to be performing strongly. CentralNic is establishing an extended track record of value-enhancing acquisitions. The company indicated that it has a strong pipeline of acquisition targets. We are supportive of further earnings accretive acquisitions to further diversify market growth, products and customer base.

¨ Conservative outlook: Despite the company’s strong revenue growth, margin performance and cash conversion relative to forecasts, CentralNic Group indicated that trading is “comfortably in line”. We leave our forecasts, which are in the lower half of the range of consensus estimates, unchanged but we see room for significant earnings upside. If we simply annualise Q1 EBITDA and adjust for the VGL acquisition, we estimate EBITDA could reach $80m, 19% above our forecast of $67m.

¨ Valuation: Even based on our conservative forecasts CentralNic’s strong growth and margins appear undervalued. Shares trades at only 7.5x 2022 EBITDA, 10x P/E and 10% FCFF yield despite delivering 53% organic growth and steady margin expansion.

Summary financials

Price131p
Market Cap£378m
Shares in issue289m
12m Trading Range80p – 154p
Free float72%
Next EventH1 update – 18 July

Financial forecasts

Yr end Dec ($’m)2021A2022E2023E2024E
Revenue410.5573.4607.3643.4
YoY growth (%)7139.75.95.9
Gross profit118.5159.9168.8178.4
SG&A-72.2-92.9-96.5-102.3
Adj. EBITDA46.36772.376.1
YoY growth (%)57.344.97.95.2
Adj. EBITDA (%)11.311.711.911.8
EPS (c) basic adj.11.816.517.819.1
DPS (p)0.81.8
Net cash (debt)-75-46.3-8.135.8
EV/EBITDA (x)9.67.56.65.7
EV/EBIT (x)10.4876
P/E (x)14.210.19.48.8
FCFF yield (%)7.810.210.613.5
Div Yield (%)0.61.4

Source: Audited Accounts and Zeus estimates

Click to view all articles for the EPIC: ,
Or click to view the full company profile:
Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
CentralNic

More articles like this

CentralNic

CentralNic signs Greenland deal

CentralNic says it has won a contract to supply registry management software to Greenland’s ccTLD. It appears to be a software licensing deal rather than an outsourced registry back-end contract. Greenland’s .gl domain is management by local telco

Fintel plc

Fintel core revenue growth is higher than Zeus forecast

Fintel plc (LON:FNTL), the leading provider of Fintech and support services to the UK retail financial services sector, has released a trading update for the six months to 30 June 2022, which reveals: Core revenue grew c.9% to

Shoe Zone plc

Shoe Zone analyst Zeus upgrades FY22 adjusted PBT forecast

Shoe Zone plc (LON:SHOE) Better than expected demand and further strong margin performance leads to an upgrade in FY22E adjusted PBT from “no less than £8.5m” to “no less than £9.5m”. Zeus revenue forecasts increase by £1.5m (1.0%)

Centralnic Group Plc

CentralNic Group: Flying high with 62% organic revenue growth

CentralNic has delivered another record quarter, with pro forma last 12 months organic revenue growth of 62% to 30 June 2022 (53% to 31 March 2022), driven by the performance of the Online Marketing division. CentralNic’s privacy-safe approach

CentralNic

Mission-Driven CEOs: Ben Crawford

Xquadrant is continuing their season on “Mission-Driven CEOs”. Top Chief Execs talk about the impact they want to make beyond just the financials – in terms of the company mission and their personal leadership legacy – and how

CentralNic

Stock market cheers CentralNic’s first-half earnings

CentralNic previewed its H1 earnings and cited continued strong topline growth. Shares are up about 15% on the news. The company said revenue was $335 million for the first six months of 2022, up 92% from the same period a

OnTheMarket Plc

OnTheMarket analyst Zeus confident in forecasts

Foxtons, one of London’s leading estate agencies with more than 50 interconnected branches across London, has signed an agreement to advertise its UK residential sales and letting properties at OnTheMarket plc (LON:OTMP). Zeus view: Foxtons, the well-known London

CentralNic

CentralNic Group year-on-year organic growth reaches a record 62%

CentralNic Group plc (LON:CNIC), the global internet platform company that derives recurring revenues selling online presence and marketing services, has announced that the positive trading momentum previously announced has continued and the Company’s organic growth has further accelerated during the

CentralNic

CentralNic Group final additional consideration for KeyDrive determined

CentralNic Group plc (LON:CNIC), the global internet platform company that derives recurring revenues selling online presence and marketing services, has announced that the additional consideration payment for the acquisition of KeyDrive SA has been determined to be USD 1,138,400. The consideration

CentralNic

What Is DNS?

Simply put, Domain Name System (DNS) is the phone book of the internet. It’s the system that converts website domain names (hostnames) into numerical values (IP address) so they can be found and loaded into your web browser.

SpaceandPeople analyst Zeus restores estimates and valuation

SpaceandPeople plc (LON:SAL) secures, sells, and manages flexible space for brand experiences, short term promotions and retailing in high footfall venues for its customers, including in shopping centres and travel hubs. The Group has issued a positive pre-close

No more posts to show