Genovis Q2 2024: Focusing fully on the enzyme business
Research Update
2024-08-22
07:35
Redeye updates its view on Genovis following the Q2 report and the announced divestment of its antibody business. As a consequence, we have revised our model to reflect lower sales projections and adjusted our fair value range accordingly. However, we believe the 21% decline on the report day was an overreaction and with the share trading in bear case territory R/R looks attractive.
FE
Filip Einarsson
Genovis reported sales of SEK29.5m (0% y/y growth), representing a shortfall of 20% compared to our SEK36.7m estimate. EBITDA came in at SEK5.3m (7.7) and was negatively impacted by SEK-1.3m in currency effects and SEK-1.6m in inventory adjustment. EBIT was SEK2.5m (6.0), representing a margin of 8.5%. The report thus was weaker across the board, mainly attributable to a challenging market environment and a shortage of venture capital for biotech companies, comprising c30% of Genovis' customer base. The end-of-quarter cash position amounted to SEK136.7m, and we estimate the current cash position to be around cSEK170m.
Genovis has announced the divestment of its antibody business, which it acquired in 2020. The company explained that this move will allow it to focus entirely on its enzyme business, prioritizing its most profitable segments. The antibody business generated SEK19.6m in sales for FY 2023 and SEK17.3m in FY 2022. While the press release did not disclose specific financial details, we estimate the price tag to be approximately 2x sales, providing a capital injection in the range of SEK30-35m.
We lower our 2024-2026 estimates by roughly 20%, reflecting revised projections following the report, the divestment of the antibody business, the removal of the anticipated follow-up for the 2019 bioprocess order, and some general fine-tuning. Consequently, our updated fair value range amounts to SEK24-102, with a base case of SEK52.
| SEKm | 2022 | 2023 | 2024e | 2025e | 2026e |
| Net Sales | 102.4 | 158.2 | 131.1 | 166.9 | 221.4 |
| Sales Growth | 10.0% | 54.6% | -17.1% | 27.3% | 32.7% |
| EBITDA | 14.9 | 63.9 | 41.3 | 58.3 | 89.4 |
| EBIT | 8.2 | 54.2 | 30.1 | 42.7 | 68.7 |
| EBIT Margin | 8.1% | 34.3% | 22.9% | 25.6% | 31.0% |
| EV/Sales | 28.7 | 20.7 | 11.6 | 9.3 | 6.7 |
| EV/EBIT | 356 | 60.5 | 50.7 | 36.3 | 21.7 |
| Genovis: Deviation table | ||||||||
| Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024a | Q2 2024e | dev. % | dev. abs | |
| Net sales | 29.5 | 30.2 | 27.3 | 40.1 | 29.5 | 36.7 | -20% | -7.2 |
| Sales growth y/y | 40% | 31% | 6% | -44% | 0% | 25% | ||
| Sales growth q/q | -59% | 2% | -10% | 47% | -26% | -8% | ||
| Gross profit | 28.1 | 27.2 | 26.0 | 38.0 | 25.7 | 32.1 | -20% | -6.4 |
| OPEX | -20.5 | -19.7 | -22.4 | -19.4 | -20.5 | -20.4 | 0% | -0.1 |
| Other external expenses | -7.2 | -7.2 | -7.8 | -7.3 | -7.7 | -7.7 | ||
| Personnel costs | -13.0 | -11.1 | -11.7 | -11.7 | -11.6 | -11.6 | ||
| Other operating expenses | -0.3 | -1.4 | -2.9 | -0.4 | -1.2 | -1.1 | ||
| EBITDA | 7.7 | 7.6 | 3.6 | 18.6 | 5.3 | 11.8 | -55% | -6.5 |
| EBITDA margin | 26% | 25% | 13% | 46% | 18% | 32% | ||
| EBIT | 6.0 | 4.5 | 0.4 | 15.8 | 2.5 | 9.8 | -74% | -7.3 |
| EBIT margin | 20% | 15% | 1% | 40% | 9% | 27% | ||
| Source: Redeye research (estimates), Genovis (historical data) |
Sales
Disclosures and disclaimers