Net sales were up 9% y/y to SEK290m. This was above our estimate of SEK285m. Nordic was particularly strong, 46% y/y to SEK71,6m. According to the management, the strong sales momentum continued from last quarter and accelerated at the end of the quarter. Order intake was down to SEK224, -3.5% from Q3-23 (SEK232m in Q4'22). Gross margin came in at 40%, driven by a good product mix and mitigated freight costs plus positive currency impact. EBIT came in at SEK26m, corresponding to an EBIT margin of 9% (2% last year). This was more or less in line with our estimates of SEK27m.

Earning per share (EPS) was SEK0.23 due to a higher adjusted tax rate in the quarter after the divestment of Carium needed to be adjusted for. EPS for the full year is SEK1.32.

At the end of the quarter, Doro has a net cash position of SEK180m. Operational cash flow in the quarter was SEK64m.

Order intake came in at SEK224m in Q4 2023 vs SEK232m in Q4 2022, down -4% y/y.

The L12M order intake inched up to SEK 949m, 5% y/y, so the positive trend continues.

The strong revenue growth in the quarter was supported by a continuation of accelerating migration of 2G to 4G technology. Moreover, Doro managed to bundle phones with Doro smartwatches in a good way to drive sales, especially in the Nordics. Sales in the Nordic posted a y/y growth of 46% to SEK71.6m in the quarter. Doro's largest geographical region, Western Europe, grew by 12% y/y to SEK120.6m. The DACH and Germany continue to be the lagging regions. Sales were down 35% y/y to SEK39m.

Doro delivered slightly better sales growth with solid profitability during 2023 compared to our estimates we did at the end of 2022. Net sales for 2023 is SEK973m vs. our estimate of SEK957m, a small beat of 1.6%. Ebit for 2023 is SEK68m compared to our estimate of SEK61m, a beat of 11%.

Now, the proposed dividend will most probably attract value and dividend investors to the Doro case. Redeye has highlighted over the past years a sound dividend policy would be a positive boost for the stock price. The result is clear: the stock reacted positively after the announcement; it traded up 20% to SEK24 yesterday.

At the beginning of the year, Doro set the foundation for future profitable growth by being cost-efficient and, at the same time, spending money on new product development. Doro´s management did a good job during 2023. As is often the case, turnarounds tend to take longer than expected, but Doro proved us wrong.

What can we expect going from here?

During 2024 we should expect to see new feature phone models and one or two new products expanding Doros "connected home" product line. We expect the demand for migration into 4G to continue in France and UK/Ireland throughout the year.

In numerous updates, we highlighted that the DACH region is crucial to Doro's future growth story. Divesting and streamlining their logistics and sales operation is underway and should be done during 2024. This will hopefully impact Doro positively in two ways; first, a more streamlined sales team, with an estimated headcount of around 7-10 people focusing only on Doros products. And by divesting IVS GmbH’s logistics business Doro will be more agile and asset-light. Plus, the fact Germany is still running a lot of devices on 2G we believe the migration towards 4G in coming years should support growth.

Our growth assumptions have been adjusted upwards, and we estimate full-year 2024 sales to come in at SEK1017m, up from SEK993mm. An adjustment of 2.5%. The positive momentum in e-commerce and online sales and a broader product portfolio should contribute to modest growth coming years.

As before, we anticipate the EBIT margin will reach 8-10% in the long run.

We value Doro using a DCF valuation approach backed by a multiples-based valuation. Our WACC is 13%, which is no change from our last update.

Our valuation Base Case is raised by 11% to SEK30. Our new valuation range is between SEK15 (15) to SEK39 (38), with a base case of SEK30 (27).

In our last update published 30th of October we listed 3 catalysts that we believed would move the stock. One of the catalysts was announcement of a dividend. Redeye is happy to see the Board of Directors proposing a SEK2 dividend for 2023, a dividend yield of 8.2%. This should attract both dividend hunters and value investors to the stock.

Market cap is SEK560m, with net cash at SEK180m Doro's enterprise value is SEK380m. This translates to a back-looking valuation of EV/EBIT 5.6x, and 4.2x 2024E on our estimate. Doros est P/E 2024E is 10.3.

Following the breakup of Doro and Careium, Doro's valuation has remained relatively low. Market scepticism regarding the return of growth after significant cost-cutting initiatives and declining volume in feature phones put pressure on the valuation. However, Doro currently holds a dominant market position in most of its geographies, benefiting from the consistent demand driven by an ageing population.

Finding relevant peers for Doro is somewhat challenging. Doro is a niche player selling hardware, and after the break-up and given its lower sales and margins, the market now values Doro at depressed multiples. On EV/Sales 2024E, Doro trades at a 40% discount (average) to peers and a 23% discount on 2024e EV/EBIT (average).

An EV/EBIT of 4.2 2024E paints the picture of low expectations from the market. Applying the EV/EBIT multiple of 9x, suggests a valuation of SEK720m, or SEK30 per share, within our DCF-valuation range.