Some improvement over Q1, more in H2

Ahead of the Q2 report, our estimates remain broadly unchanged and we reiterate our fair value range of EUR 35-39. While we still expect profitability in Q2 to be relatively low, we anticipate the earnings trend will pick up towards H2. We note that the company has recently won new research deals. Yet, the equity case and valuation rely on the Nordic growth story, which remains in an early phase.

Q2 expectations – Flat q/q performance

During the quarter, Inderes added new companies to its equity research coverage, supporting the recurring revenue and hence securing cash flow. At quarter-end, we estimate the number of companies under commissioned research to be 127, up 17% y/y and 4% q/q. For Flik, June is typically a weak month but the AGM season and a few investor events should support the quarter sales. We expect Q2 sales of EUR 3.3m and EBITA of EUR 0.3m. In addition to key numbers, we will focus on management’s commentary around its new deal hunting in Sweden as well as HCA cooperation progress.

2022 will be H2-loaded – We are near the lower end of the guidance range

We keep our estimates broadly unchanged as the new research contracts offset the IPO-driven activity which looks to be muted for some time. We are close to the lower end of the guidance range and think that the upper end of the range indicates a scenario of IPO activity picking up. In terms of profit generation, F22 will likely be H2-loaded due to the seasonality impact of salaries and stronger project activity in H2.

Case remains intact – Valuation reflecting success in Nordic expansion

Inderes continues to trade at relatively high 2022E multiples, with EV/EBITA being 27x. We, however, remind that the company is investing in its future Nordic growth, which carries extra costs but the top line impact lies ahead. Our fair value range remains intact at EUR 35-39.