Gasporox: Executing its long-term strategy
Research Update
2024-04-23
13:14
Analyst Q&A
Closed
Rasmus Jacobsson answered 4 questions.
Gasporox’s results closely align with RRe expectations, showing seven quarters of positive EBITDA driven by sales from VialArch, GPX1500, and after-sales services. The company is preparing to launch a new version of VialArch in June and is already securing pre-orders from the pharma and beverage sectors. The upcoming debt maturity might pressure the share, while forthcoming earnings and order announcements could boost it.
RJ
MW
Rasmus Jacobsson
Martin Wahlström
Contents
Net sales for Gasporox reached SEK8.7m, down 5% y/y but close to RRe’s SEK8.2m estimate, driven by VialArch (likely including the MaxCann order), GPX1500 Vial, and after-sales. EBITDA was SEK1.4m with a margin of 16%, in line with the RRe of SEK1.3m, despite higher OPEX offsetting sales gains. Gasporox continues its trend towards profitability, marking seven consecutive quarters of positive EBITDA, albeit with minor losses when adjusting for capitalized R&D.
Gasporox plans to launch VialArch H20 at ACHEMA in June, designed to measure pressure through water steam, with pre-launch orders from the pharma and beverage sectors. The company faces potential liquidity pressure from a SEK5.5m (excl. accumulated PIK interest) convertible loan maturing in autumn 2024 if the share falls below the SEK8.5 conversion price. However, major stakeholders seem inclined to increase equity. Gasporox has contingency plans to settle the debt in cash. Although no specifics were disclosed, we speculate it could be done via a refinancing. The AGM will vote on an incentive package to the CEO, including issuing convertible debt of SEK0.8m (interest rate of 3%, conversion price SEK16.15), which, if approved, will boost liquidity. Gasporox had SEK10.4m in cash and SEK12.8m in working capital as of Q1 2024.
The report aligned with our expectations, and we maintain our estimates. We expect 2024e to be lackluster in growth due to the strong 2023 (“only” 15% y/y on RRe). Gasporox trades at a 35-55% discount to peers on EV/S (1.4-2.6x) while on a 10-80% premium on EV/EBITDA 20224e-2026e (11.3-26.1x). We reiterate our fair value range of SEK9-36 with a base case of SEK18. The upcoming debt maturity might pressure the share, while forthcoming earnings and order announcements could boost it.
SEKm | 2022 | 2023 | 2024e | 2025e | 2026e |
Net Sales | 21.4 | 31.4 | 36.3 | 48.9 | 66.1 |
Sales Growth | 36.3% | 46.5% | 15.4% | 35.0% | 35.0% |
EBITDA | -0.90 | 3.6 | 4.8 | 8.5 | 19.6 |
EBIT | -4.2 | -0.58 | -0.45 | 2.3 | 12.6 |
EBIT Margin | -19.7% | -1.8% | -1.2% | 4.7% | 19.1% |
Net Income | -4.4 | -1.2 | -1.2 | 1.8 | 10.0 |
EV/Sales | 4.1 | 3.9 | 2.6 | 1.9 | 1.3 |
EV/EBIT | -21.0 | -215 | -210 | 40.9 | 6.9 |
Case
High incremental return
Evidence
Robust growth and customer interest
Supportive Analysis
Challenge
Biting off More Than it Can Chew
Challenge
Untested Expansion
Valuation
Growth Runway Not Priced In
People: 4
CEO Märta Lewander Xu, who joined Gasporox in 2011, has a Ph.D. in laser absorption spectroscopy of gas in scattering media. Her technical background aids Gasporox's application. The board is well-balanced and most large shareholders are active board members. We are encouraged by management's increased ownership.
Business: 3
Strategic partnerships and an asset-light business model earn three points for the Company. Gasporox also has a strong customer value proposition and a long growth runway. Last, we expect this score to rise as we learn more about Gasporox's expansion in the food and beverage sectors and as its installed base grows and its aftermarket services generate more recurring revenues.
Financials: 2
Gasporox has seen strong revenue growth since its IPO and has a fantastic gross margin that exceeds 70%. The company loses points because it's still unprofitable. We expect this score to rise as the Company becomes profitable.
Income statement | |||
SEKm | 2023 | 2024e | 2025e |
Revenues | 40.6 | 44.1 | 54.9 |
Cost of Revenue | 6.6 | 7.3 | 12.2 |
Operating Expenses | 34.6 | 37.3 | 40.4 |
EBITDA | 3.6 | 4.8 | 8.5 |
Depreciation | 0.57 | 0.56 | 0.77 |
Amortizations | 3.7 | 4.8 | 5.4 |
EBIT | -0.58 | -0.45 | 2.3 |
Shares in Associates | 0.00 | 0.00 | 0.00 |
Interest Expenses | -0.80 | -0.78 | 0.00 |
Net Financial Items | -0.67 | -0.78 | 0.00 |
EBT | -1.2 | -1.2 | 2.3 |
Income Tax Expenses | 0.00 | 0.00 | 0.49 |
Net Income | -1.2 | -1.2 | 1.8 |
Balance sheet | |||
Assets | |||
Non-current assets | |||
SEKm | 2023 | 2024e | 2025e |
Property, Plant and Equipment (Net) | 1.6 | 2.1 | 2.8 |
Goodwill | 0.00 | 0.00 | 0.00 |
Intangible Assets | 19.4 | 20.6 | 21.2 |
Right-of-Use Assets | 0.00 | 0.00 | 0.00 |
Other Non-Current Assets | 0.00 | 0.00 | 0.00 |
Total Non-Current Assets | 20.9 | 22.7 | 24.0 |
Current assets | |||
SEKm | 2023 | 2024e | 2025e |
Inventories | 5.4 | 4.6 | 7.7 |
Accounts Receivable | 4.4 | 7.4 | 10.1 |
Other Current Assets | 2.2 | 4.4 | 5.9 |
Cash Equivalents | 10.6 | 1.2 | 0.64 |
Total Current Assets | 22.6 | 17.6 | 24.3 |
Total Assets | 43.5 | 40.2 | 48.3 |
Equity and Liabilities | |||
Equity | |||
SEKm | 2023 | 2024e | 2025e |
Non Controlling Interest | 0.00 | 0.00 | 0.00 |
Shareholder's Equity | 23.2 | 22.0 | 23.8 |
Non-current liabilities | |||
SEKm | 2023 | 2024e | 2025e |
Long Term Debt | 2.0 | 2.0 | 2.0 |
Long Term Lease Liabilities | 0.00 | 0.00 | 0.00 |
Other Long Term Liabilities | 0.79 | 0.79 | 0.79 |
Total Non-Current Liabilities | 2.8 | 2.8 | 2.8 |
Current liabilities | |||
SEKm | 2023 | 2024e | 2025e |
Short Term Debt | 6.7 | 0.00 | 0.00 |
Short Term Lease Liabilities | 0.00 | 0.00 | 0.00 |
Accounts Payable | 1.7 | 2.4 | 4.0 |
Other Current Liabilities | 0.57 | 13.1 | 17.6 |
Total Current Liabilities | 17.5 | 15.4 | 21.6 |
Total Liabilities and Equity | 43.5 | 40.2 | 48.3 |
Cash flow | |||
SEKm | 2023 | 2024e | 2025e |
Operating Cash Flow | 3.3 | -2.3 | 6.9 |
Investing Cash Flow | -7.0 | -7.1 | -7.5 |
Financing Cash Flow | -0.24 | 0.00 | 0.00 |
Disclosures and disclaimers
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