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Research: TMT
YOC’s H122 results show the positive impact on margins from the growth in its proprietary VIS.X platform. On revenues up by 26% on H121, EBITDA margin has stepped up from 9.5% to 11.5%. FY22 guidance is unchanged, implying growth at a similar pace in H222 as achieved in H122, with an EBITDA margin of around 18% (all from mid-points of guided range). Unlike most of the global adtech sector, YOC’s shares have performed very well year to date as the strength of its offering, marrying mobile programmatic delivery with high-impact formats, has become better understood.
YOC |
Improving margins as VIS.X performs
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TMT |
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17 August 2022 |
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YOC is a research client of Edison Investment Research Limited. |
YOC’s H122 results show the positive impact on margins from the growth in its proprietary VIS.X platform. On revenues up by 26% on H121, EBITDA margin has stepped up from 9.5% to 11.5%. FY22 guidance is unchanged, implying growth at a similar pace in H222 as achieved in H122, with an EBITDA margin of around 18% (all from mid-points of guided range). Unlike most of the global adtech sector, YOC’s shares have performed very well year to date as the strength of its offering, marrying mobile programmatic delivery with high-impact formats, has become better understood.
Extending the reach
YOC has built a strong roster of premium publishers, which are attractive to advertisers, with the VIS.X platform giving the ability to deliver high-impact formats in a brand-safe environment. It has garnered a good reputation in the mobile space (for which the platform was designed) and is now extending VIS.X to desktop, having added desktop to its traditional offering during FY21. This means that it can offer the full range of programmatic options for brand owners and agencies. The other addition for the current year is the inclusion of the Swiss market through the acquisition of theINDUSTRY AG in January, enabling the group to offer solutions across the DACH region.
Standing out from the crowd
Deteriorating macroeconomic conditions are a headwind for H222, and potentially FY23, global advertising spend. Spending on brand normally fares better than specific campaigns during downturns and brand owners will be even more anxious to achieve a good return on their advertising spend, which should be a relative advantage for YOC and its VIS.X platform. Continuing internal investment is important to ensure that YOC retains its premium positioning. In H122, it spent €428k on development costs and €389k on its Swiss acquisition (total cost of up to €750k subject to FY22–24 results, to be met from cash flow). Net debt (excluding lease liabilities) at end-June was €2,471k, down from €3,507k at end-December.
Valuation: Marked outperformance year to date
YOC’s shares have performed strongly year to date, up by 25%, while other global adtech companies have suffered from stock market rotation away from high growth and tech stocks, falling on average by 38%. Across FY22e sales and EBITDA, YOC trades at EV multiples of 2.5x and 15.9x, a discount of 39% to peers on the former metric and a 19% premium on the latter. We attribute this outperformance to growing understanding and recognition of the attractions of the VIS.X platform and a tightly held share register.
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Consensus estimates
Source: YOC. *Note: Mid-point of management’s guidance. |
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Research: Healthcare
Basilea’s H122 revenues of CHF58.7m were roughly in-line with our annualised estimates (FY22e: CHF110m) and company guidance, including CHF28.9m in royalty payments from sales of Cresemba (H121: CHF23.6m, a 22.5% increase). We see this as a positive sign for the company as we expect Cresemba royalties to provide important support for the top-line. Following positive results from the Phase III ERADICATE study in June 2022 and winding down of oncology activities in H122, R&D expenses fell to CHF37.1m (from CHF41.7m in H121) resulting in a reduction in the operating loss to CHF9.0m, 42% lower than H121 (CHF15.4m). We see this as encouraging support for management’s goal of reaching operating profitability in FY23. Basilea reduced its December 2022-maturing convertible bond position by CHF6.6m in H122 and we expect further information on the company’s debt strategy in H222. Our financial estimates are affected only by our updated FX rate assumptions. We value Basilea at CHF893.8 or CHF75.5/share (previously CHF886.7m or CHF74.9/share).