Movinn A/S, founded in 2014, is one of Denmark’s leading providers of fully serviced and furnished apartments, which the Company rents out to large international companies who utilize them mainly for employees working abroad. Movinn also offers co-living and long-term furniture rental through the brand Collective yoyo. The Company is focused on tech, where several IT- and software systems have been developed inhouse, which helps to provide the best possible service to customers and create a scalable business model. Apart from the Danish market, Movinn has entered the Swedish market, with ambitions to expand to Germany.
Pressmeddelanden
Stronger Quarters Ahead
Movinn has started the year of 2023 strongly regarding revenues, delivering above our expectations, but with a more challenging development on the cost side. Going forward, we expect costs to decrease in relation to revenues as demand improves, while revenues is expected to keep growing at a steady pace. This, together with the Company being expected to decrease its investments as a result of slower unit growth and taking on larger projects with more units at once, is expected to improve cash flows in the coming years. With an estimated EBITDA of DKK 11.4m in 2023, and with an applied target multiple of EV/EBITDA 16x, a potential fair value per share of DKK 10.2 is derived in a Base scenario.
- Delivered Strong Revenue per Unit
During Q1-23, vacancy rates were high, amounting to 16.1% on the Danish units and 27.9% on the Swedish units. This was a result of a decrease in demand, due to natural seasonal patterns, but also macroeconomic factors. Despite this, Movinn delivered a revenue per unit of DKK 198t and DKK 83t for Danish and Swedish units respectively, compared to Analyst Groups estimates of DKK 192t and DKK 90t for the full year 2023. When vacancy rates comes down, which is expected in the coming quarters as demand improves, we estimate that Movinn can deliver a revenue per unit in the higher end of the Company’s guidance of DKK 180-225t, why we have updated the revenue per unit in our model to amount to DKK 212t and DKK 100t for the Danish and Swedish units respectively in 2023, leading to a higher total revenue.
- Higher Costs Than Expected…
The variable costs in Q1-23 amounted to DKK 16.1m, which was higher compared to our estimates (13.9) and the same period last year (11.9). We expect the costs to come down in relation to revenue in the coming quarters as macroeconomic factors improve and demand increases, leading to increased margins.
- … but Positive Signs in the Cash Flow Statement
Movinn showed a slower unit growth in Q1-23 than during 2022, which was expected and according to plan. Movinn is expected to take a step back in unit growth during 2023, hence decrease investments and improve the cash flow. During Q1-23, the cash flow statement showed less investments in both furniture and security deposits as a result of slower unit growth, why we estimate a positive cash flow for the rest of 2023 where a stronger bottom-line result is expected through lower costs.
- Our Valuation Range Stands
As a result of the revenue and revenue per unit being higher than expected and costs also being higher than expected, we have updated our forecasts slightly. However, Movinn is, according to Analyst Group, developing in the right direction, why we repeat our valuation range in all scenarios.
6
Värdedrivare
4
Historisk lönsamhet
8
Ledning & Styrelse
4
Riskprofil
Samtliga analyser av bolag från och med år 2020 betygssätts utifrån ett nytt betygssystem - Värdedrivare, Historisk Lönsamhet och Ledning & Styrelse sträcker sig från 1 till 10, där 10 är högsta betyg. Riskprofil sträcker sig från 1 till 10, där 10 är att anse som högst risk. Aktieanalyser av bolag publicerade innan 2020 har betygssatts utifrån en annan modell.
An Undervalued PropTech Company
Since the IPO in 2021, Movinn (”Movinn” or the ”Company”) has showed a strong revenue growth of 31% in the last year, while being profitable on an EBITDA level with an EBITDA of DKK 4.8m, corresponding to a profit margin of 7% (LTM). Despite great fundamental performance, the stock has dropped 36% since the IPO, corresponding to a current valuation of DKK ~92m, creating an investment opportunity according to Analyst Group. Movinn is expected to decrease the investments needed to add new units from 2023 and onwards, leading to improved cash flow and ROIC, as well as growing the Company’s profitability as a result of the inhouse developed IT-infrastructure. With an estimated EBITDA of DKK 11.3m, and with an applied target multiple of EV/EBITDA 16x, a potential fair value per share of DKK 10.2 is derived in a Base scenario.
- Capitalizing on Strong Market Trends
Many western countries are currently experiencing a shortage in skilled labor force, why foreign workforce is growing in demand. In Germany, a country with the second most expats in the world, the government are currently planning to reform its immigration legislation to make it easier for third country nationals to work in Germany. Movinn is expected to capitalize on this as the Company’s main customers are companies who needs accommodations for employees.
- A Leading PropTech Company
Movinn has developed an IT-infrastructure consisting of a management system, which secures automation and efficiency in sales, a booking platform and an access system inhouse, which helps the Company provide quality service and maintain a slim organization. Due to the IT systems, a lot of the processes, such as real time availability on the website, rental contracts and key handovers, are automated. This enables the total need of additional employees to grow at a slower pace than revenues, which proves the scalability in the business model, owing to Movinn’s IT systems.
- Less Investments is Expected to Drive Cash Flow
During the last years, the number of units have grown from 179 at the end of Q3-20 to 440 at the end of 2022. While this has driven the revenue growth, a lot of investments have been made in connection to unit growth, such as furniture and cash deposits. Going forward, Movinn is expected to decrease the investments needed when adding a unit, by renting apartments that are already furnished, as well as replacing security deposits with rental guarantees, which is expected to improve ROIC and cash flow.
- Trading at an Unmotivated Discount
Since the IPO in November 2021, Movinn’s stock has fallen ~36%, despite the Company delivering fundamentally. Today, Movinn is valued at EV/EBITDA 9.1x on our 2023 estimated EBITDA, which Analyst Group consider to bee too low, given Movinn’s growth prospects, low net debt and expected positive cash flow around the corner.
6
Värdedrivare
4
Historisk lönsamhet
8
Ledning & Styrelse
3
Riskprofil
Samtliga analyser av bolag från och med år 2020 betygssätts utifrån ett nytt betygssystem - Värdedrivare, Historisk Lönsamhet och Ledning & Styrelse sträcker sig från 1 till 10, där 10 är högsta betyg. Riskprofil sträcker sig från 1 till 10, där 10 är att anse som högst risk. Aktieanalyser av bolag publicerade innan 2020 har betygssatts utifrån en annan modell.
Analytikerkommentarer
Aktiekurs
N/A
Värderingsintervall
2023-04-12
Bear
3,2 DKKBase
10,2 DKKBull
12,7 DKKUtveckling
Huvudägare
2023-03-31
Analyst Groups Comment on Movinn’s Q1-report
2023-05-04
Movinn published on May 4th the companys Q1-report for 2023. The following are some key points that we have chosen to highlight in connection with the report:
Revenues slightly above our estimates
Movinn’s revenue amounted to DKK 20.6m during the first quarters, close in line with our estimates of DKK 20.2m. The revenue growth amounted to 27% compared to the same period last year, when the revenue amounted to DKK 16.2m. The revenue growth compared to last year is a result of Movinn’s strong unit growth during 2022, which is now materializing in sales. Furthermore, the revenue per unit amounted to DKK 198t on the Danish units and DKK 83t on the Swedish units, which can be compared to DKK 183t and DKK 20t respectively for the full year 2022. Analyst Group estimates the revenue per unit on the Danish units to DKK 192t and for the Swedish units to DKK 90t for the full year 2023. As we expect the revenue per unit to increase successively over the year because of new units maturing, we believe that the first quarter results regarding revenue per unit were strong and above what we expected. The strong revenue per unit was achieved despite the higher-than-expected vacancy rates of 16.1% on the Danish units and 27.9% on the Swedish units, why we estimate the revenue per unit to increase even further when demand improves, and vacancy rates decreases to more normal levels. Demand is expected to improve in the coming quarters due to the natural seasonal pattern where the second and third quarters are usually stronger for Movinn, as well as through a well-diversified client portfolio.
Regarding unit growth, Movinn grew its unit portfolio by four new units during the first quarter, which were added on the Swedish market. A slower unit growth was expected as the company focuses on fully integrating units that was added during 2022, hence increasing bottom line performance and cash flows. Furthermore, Movinn is currently going through a change in strategy, taking on larger projects, i.e., projects with more units at once, meaning more units will be added at the same time compared to several smaller units in different locations as has been the case in the past. This strategy is expected to lead to lower costs going forward, as larger contracts are easier to negotiate and maintenance of units in the same building is more efficient, but also that unit growth will fluctuate more between quarters. Moreover, Collective yoyo, Movinn’s brand for furniture rental was launched during the quarter. Even if the brand is new and stands for a minor part of the revenue share (1%), we see positive on this as it adds an additional revenue stream for the company, as well as activating the furniture on the balance sheet. Analyst Group estimates that Collective yoyo will increase its revenue share going forward.
Higher costs than expected – but better efficiency is expected going forward
The variable costs in Q1-23 amounted to DKK 16.1m, which was higher compared to our estimates (13.9) and the same period last year (11.9). The higher costs are a result of changes in the organization and processes to sustain future growth. However, Analyst Group expects the variable costs to decrease in relation to revenues going forward, primarily driven by the company taking on larger projects going forward, leading to a better negotiation position as well as better efficiency in maintenance. Furthermore, Analyst Group expects that macroeconomic factors, such as continued decreased inflation and energy prices, will decrease Movinn’s cost base going forward. On a positive note, the Swedish subsidiary is approaching break-even and is expected to contribute with a positive EBITDA from operations at the end of the year. EBITDA from operations amounted to DKK 0.8m for the first quarter, compared to our estimates of DKK 3.5m. The table below shows a complete comparison between our estimates and the result.
Positive signs in the cash flow statement – better cash flow expected in the coming quarters
The cash flow from operating activities amounted to DKK -0.8m, compared to DKK 0.4m during the same period last year, where the decrease is attributable to the higher costs during Q1-23. However, regarding the cash flow from investing activities, we can see a decrease in investments in fixed assets as well as security deposits, which is assumed to be due to fewer units being added. Going forward, as costs are expected to decrease, hence contributing to an increased EBIT, we expect a positive effect on the cash flow going forward through the decreasing investments. Furthermore, when entering the German market, which is expected in 2024, Movinn is expected to replace security deposits with rental guarantees, which is expected to decrease investments further, hence contributing to improved ROIC and cash flow.
To summarize, Movinn delivered a first quarter with slightly higher revenue than expected, where a strong revenue per unit was the largest contributor, despite a higher-than-expected vacancy rate. Going forward, when demand is expected to improve and vacancy rates drop, we estimate that this will result in a higher revenue per unit. Regarding costs, the variable costs and staff costs were higher than expected, but where we see improvement going forward as the macroeconomic situation improves, as well as the company taking on larger projects.
We will return with an updated equity research report of Movinn.