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    ALAVY   BE0974334667

AUDIOVALLEY

(ALAVY)
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AudioValley : (EN) Note Merodis – Equity Research Report

04/08/2021 | 05:19am EDT

AudioValley

BELGIUM

Bloomberg: ALAVY FP

ISIN: BE0974334667

Closing price (31 March 2021): EUR 3.57

Market capitalisation: €37m

EV: €50m

Free float: 45%

Share price performance vs. peers (€, rebased)

10

8

6

4

2

0

Jun-19

Dec-19

Jun-20Dec-20

AudioValley

Peers

12M-forward EV/Sales multiples

8

6

4

2

0

Jun-15

Jun-17

Jun-19

Jun-21

Ad tech & related

AudioValley

Ad agencies

Important Note

Merodis BVB/SRL (Merodis) has been mandated by AudioValley S.A. (AudioValley or the Company) to produce a neutral, fair and elaborate equity research report on the company with the aim to increase the visibility and awareness of AudioValley's shares in the financial markets. The authors hereby declare that any views expressed in this report represent their personal opinion and that AudioValley has neither limited nor in any other way influenced the content of this report.

Please read the disclaimer at the end of this

report

Equity Research Report

7 April 2021

A hidden jewel in the process of unlocking (hidden) value

Unique European listed technology play on digital audio disruption…

AudioValley is a Belgian technology company active in the field of digital audio disruption covering most of the industry's value chain: from music licencing to software enabling the creation, streaming and hosting of digital audio content over the internet for a range of publishers including online radio channels, podcasts, connected hardware, in-app gaming, etc. The digital audio market is growing fast (39% CAGR 2020-23e), catching up (in Europe) or taking over (in North America) analogue audio in terms of audience. AudioValley's main USP, and growth driver, is its global digital ad selling business, Targetspot, a technology platform allowing digital audio publishers to monetise their audience through targeted advertising.

  • momentum is picking up following Covid19 headwinds

2020 results were recently reported, showing top line decline driven by Covid19 offset by strong cost control, which lead to EBITDA profitability. The balance sheet has strengthened thanks to a capital injection in 2020, the early repayment of a large vendor loan in 2020 and a loan extension (to 2024) as recently reported. This should ease the company's risk profile. In addition, Q1 2021 shows the early signs of a market revival in North America, with 22% y-o-y sales growth, which supports our views of a strong market revival an potential, including in Europe as from Q2.

Three reasons to take a closer look at this hidden jewel

We see at least three good reasons to take a closer look at AudioValley: (1) Strong growth expected in the core digital audio advertising activity (Targetspot). Going forward, we expect 54% sales CAGR 2020-23e, driven by market growth in both Europe (46% CAGR) and the US (39%) as well as market share gains in both regions (announcements of client wins over the past 12 months support our expectations). M&A action in the sector highlights the attraction of the business, with transactions on peers valued at up to 5x sales. At such levels, Targetspot alone would be worth EUR 8.7/share. (2) Unlocking sizeable potential value in peripheral assets: Jamendo Rights and Winamp. Jamendo Rights is tackling a EUR 10bn European music rights market with a model that should move business away from incumbent monopolies. Sector transactions also point to significant value upside. Winamp is a popular media player which is 100% owned by AudioValley. A relaunch is in the cards, which could highlight the activity's value potential. The third reason is the attractive entry point that we expect (see below)

Valuations suggest an attractive entry point

The stock is valued at 1.3x EV/Sales 2021e, compared to historical levels of 2.5x and Targetspot's sector M&A transaction multiples at between 4.5-5x. Our fair-value estimate of EUR 7.6/share is based on a SOTP, valuing Targetspot at an exit valuation multiple of 3x sales. At 5x sales for Targetspot, our fair-value estimate jumps to EUR 13.9/share. These fair-value estimates exclude any value for Jamendo Rights or Winamp, two hidden jewels in our view.

Arnaud W. Goossens

ago@merodis.com

Key financials

EURm

2017

2018

2019pf

2020

2021e

2022e

Sales

14.0

24.6

22.0

19.6

32.0

47.6

EBITDA

1.2

0.3

-0.6

0.6

1.7

4.3

EBITDA

3.2

-4.1

2.3

-3.4

-2.6

-0.3

Net profit

2.7

-5.3

4.8

-4.8

-3.8

-1.2

EPS (EUR)

0.98

-0.94

0.56

-0.51

-0.37

-0.12

P/E (x)

-4.8

8.2

-7.7

-9.7

-30.4

EV/Sales (x)

2.4

2.3

2.5

1.3

0.8

EV/EBITDA (x)

207.5

-86.6

81.9

24.7

8.9

Source: Company data, Merodis, FactSet

Equity Research Report - Initiation of Coverage

Enterprise Value (€m): 50

Financial summary

Market Cap. (€m): 37

Free-float MCap (€m): 17

CAGR

CAGR

Consolidated P&L (€m)

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020e

2021e

2022e

17-1920-22e

Sales

14

25

22

20

32

48

25.2

55.9

Adj. EBITDA

0

-2

-3

-1

0

2

na

na

EBITDA

1

0

-1

1

2

4

na

166.7

Adj. EBIT

-3

-7

-2

-6

-5

-3

-24.1

-25.2

Pretax profit

2

-6

5

-5

-4

-1

40.7

-52.0

Net profit

3

-5

5

-5

-4

-1

33.7

-49.9

Cash Flow (€m)

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020e

2021e

2022e

17-1920-22e

Op. results

0

-2

-3

-1

0

2

na

na

WCR

-1

1

-2

1

3

2

62.6

24.5

Gros Op CF

-1

0

-5

0

3

5

182.2

290.5

Capex

-1

-1

-1

0

-1

-1

41.5

35.6

FCF

-2

-2

-4

-2

1

3

45.9

na

Net disp./(acq.)

2

0

8

0

1

0

91.4

na

Dividends paid

0

0

0

0

0

0

na

na

Equity issue

0

10

0

5

0

0

Others

0

0

4

-1

0

0

na

na

Net Debt (incr.)/decr.

0

7

8

2

2

3

557.8

9.2

Balance Sheet (€m)

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020e

2021e

2022e

17-19

20-22e

WC

-7

-8

-5

-7

-10

-12

-11.3

30.6

Capital Employed

36

35

32

29

25

21

-6.8

-15.2

Cash & Equivalent

1

1

2

1

3

6

17.4

162.3

Gross Debt

30

23

18

15

15

15

-21.6

0.0

Equity

6

11

14

15

11

10

52.0

-18.7

Balance sheet total

51

51

47

45

49

55

-4.5

10.3

Growth (%)

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020e

2021e

2022e

Sales

76

-11

-11

63

49

EBITDA

na

na

na

na

475

EBIT

na

na

na

na

na

Net profit

na

na

na

na

na

FCF

na

na

na

na

110

NWC

na

na

na

na

na

Capital Employed

-4

-9

-9

-12

-18

Shareholder Equity

70

36

3

-26

-11

Financial Ratios

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020e

2021e

2022e

Gross margin (%)

63

58

44

47

46

44

EBITDA margin (%)

1

-7

-13

-6

1

5

EBIT margin (%)

-21

-29

-8

-30

-15

-7

Net margin (%)

19

-22

22

-25

-12

-3

Opex/Sales (%)

99

107

113

106

99

95

Depreciation/Sales (%)

22

22

-6

25

17

12

Depreciation/EBITDA (%)

2086

-321

43

-442

1279

237

Tax rate (%)

17

-4

6

-8

0

0

Capex/Sales (%)

5

4

6

3

2

2

FCF/Sales (%)

-14

-10

-20

-8

4

6

WCR/Sales (%)

-5

6

-9

7

8

5

WC/Sales (%)

-50

-34

-25

-35

-30

-25

Gearing (%)

453

212

113

98

111

97

Net Debt/EBITDA (x)

194.4

-13.3

-5.6

-13.3

29.2

4.0

ROCE post-tax (%)

-9

-20

-6

-19

-20

-16

ROE (%)

44

-50

34

-33

-35

-12

Dividend Payout (%)

0

0

0

0

0

0

Valuation

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020e

2021e

2022e

17-1920-22e

Market Capitalisation (€m)

39

40

41

37

37

na

-4.6

+ Net Financial Debt (€)

28

22

16

15

12

10

-24.0

-18.9

+ Restated Min. + others (€m)

1

1

0

0

0

0

na

na

- Associates & Inv. (€m)

2

3

5

5

7

8

62.4

22.6

= Enterprise Value (€m)

60

51

50

42

38

na

-12.1

Assoc. NFD (gr. share) (€m)

EV/Sales (x)

2.4

2.3

2.5

1.3

0.8

EV/Adj. EBITDA (x)

-35.5

-17.8

-45.6

100.1

15.9

EV/EBITDA (x)

207.5

-86.6

81.9

24.7

8.9

EV/EBIT (x)

-8.4

-30.9

-8.4

-8.5

-11.6

EV/FCF (x)

-24.3

-11.9

-29.9

32.6

14.2

EV/Capital Employed (x)

1.7

1.6

1.7

1.7

1.9

P/E (x)

-4.8

8

-7.7

-9.7

-30.4

P/BVPS (x)

2.4

2.8

2.5

3.3

3.8

FCF yield (%)

-6.3

-10.9

-4.1

3.5

7.3

Per share data

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020e

2021e

2022e

17-1920-22e

# of shares

2.76

8.62

8.62

10.34

10.34

10.34

76.6

0.0

avg # of sh. (FD, ex-treas.)

2.76

5.69

8.62

9.48

10.34

10.34

76.6

4.4

Share price

4.50

4.59

3.92

3.57

3.57

na

-4.6

EPS

0.98

-0.94

0.56

-0.51

-0.37

-0.12

-24.3

-52.0

EPS FD

0.98

-0.94

0.56

-0.51

-0.37

-0.12

-24.3

-52.0

BVPS

2.25

1.86

1.67

1.57

1.07

0.95

-14.0

-22.2

DPS

0.00

0.00

0.00

0.00

0.00

0.00

na

na

Source: Company data, Merodis Equity Research

2/18

Equity Research Report - Initiation of Coverage

Financial summary

Company profile

Sales split

AudioValley, listed on Euronext Paris/Brussels, is a pioneer and leader in the digital-audio revolution with extensive know-how covering most of the digital-audio value chain. AudioValley has an impressive brand heritage with high-end products and services ranging from the monetization of internet radio (Targetspot) and music licensing (Jamendo), to the creation, streaming and hosting of online radio (Shoutcast) and even a renowned multiplatform media player (Winamp). An unprecedented digital revolution is taking place in the audio industry, with AudioValley's technology solutions enabling professionals in the B2B market to participate. The company is launching Jamendo Rights and re-launching Winamp, a popular multi-platform media player. Storever, an in-store digital audio marketing activity was disposed of in 2020 (hence the 2019 proforma accounts).

AudioValley share price

Jamendo (music licence)

11%

Targetspot (ad agency)

89%

AudioValley EV/Sales

107.0

9

8

6.0

7

5.0

6

4.0

5

4

3.0

3

2.0

2

1

1.0

0

0.0

Sep-18

Mar-19

Sep-19

Mar-20

Sep-20

Mar

AudioValley

Peers

Ad tech & related

AudioValley

Ad agencies

Profitability outlook

Geographic breakdown of sales

63

58

44

47

46

44

Europe

1.0

1.3

5.1

39%

N America

-6.8

-5.6

-13.1

61%

2017

2018

2019

2020

2021e

2022e

Gross margin (%)

Adj. EBITDA margin (%)

Source: Company data, Merodis Equity Research

3/18

Equity Research Report - Initiation of Coverage

TABLE OF CONTENTS(click to follow link in pdf)

Investment Case................................................................................................

5

(1) Targetspot set to deliver 54% sales CAGR to 2023e ................................

5

(2) Unlocking potential value: Jamendo Rights & Winamp...........................

6

(3) Attractive entry point...............................................................................

7

Valuation update ...........................................................................................

7

SWOT analysis..............................................................................................

12

FY 2020 results ................................................................................................

14

P&L analysis .................................................................................................

14

Balance sheet analysis .................................................................................

16

Guidance for 2021 .......................................................................................

17

Disclaimer........................................................................................................

18

TABLE OF FIGURES(click to follow link in pdf)

Figure 1. Sum-of-the-parts valuation model..................................................

8

Figure 2. Historical EV/Sales 12M Fwd: AudioValley vs Peers .......................

8

Figure 3. Advertising peer group valuation analysis....................................

10

Figure 4. Advertising peer group benchmarking analysis............................

11

Figure 5. AudioValley P&L account and forecasts .......................................

14

Figure 6. Sales breakdown in 2020 (geographic breakdown of 2019) ........

15

Figure 7. Group profitability expectations...................................................

16

Figure 8. AudioValley Balance Sheet and forecasts analytics......................

16

Figure 9. AudioValley Balance Sheet and forecasts.....................................

17

4/18

Equity Research Report - Initiation of Coverage

INVESTMENT CASE

European digital audio software and ad tech company

AudioValley, listed on Euronext Paris/Brussels, is a pioneer and leader in the digital-audio revolution with extensive know-how covering most of the digital- audio value chain including monetisation of audiences through ad spend. AudioValley has an impressive brand heritage with high-end products and services ranging from the creation, streaming and hosting of online radio and, importantly, the monetisation of digital audio platforms (music streaming platforms, internet radios, podcasts, in-app gaming, etc.) through targeted advertising (Targetspot) to music licensing/rights (Jamendo Licencing and Jamendo Rights) and a renowned multi-platform media player (Winamp).

Increasingly focused on digital audio ad spend

AudioValley operates two business units: Targetspot (89% of group sales in 2020) and Jamendo (11%).

Targetspot, a B2B platform consists of an ad tech software providing audience/listener data management with real-time analytics allowing for targeted advertising over streaming audio, the sweet-spot for any global or local advertisers (looking for efficiency) and publishers (looking to monetise their audience with higher CPMs).

We see at least three good reasons to take a closer look at AudioValley:

  • Strong growth expected in the core digital audio advertising activity (Targetspot),
  • Unlocking sizeable potential value in peripheral assets (Jamendo Rights and Winamp),
  • Attractive entry point regarding to valuation and LT upside potential.

(1) Targetspot set to deliver 54% sales CAGR to 2023e

AudioValley is a key global player in the digital audio disruption

An unprecedented digital revolution is taking place in the audio industry, with AudioValley's technology solutions enabling professionals in the B2B market to participate. Targetspot allows for the creation, streaming and hosting of online radio and, importantly, the monetisation of digital audio platforms (internet radios, podcasts, in-app gaming, etc.) through targeted advertising.

Quite uniquely for a Belgian company, Targetspot is market leader in Europe (34% of 2020 sales) and a leading player in the US as well (66% of 2020 sales in North America), an attractive positioning for international advertisers as well as digital audio platforms such as Soundcast, Deezer, TuneIn, Sonos, etc., who are clients of Targetspot.

5/18

Pour lire la suite de ce noodl, vous pouvez consulter la version originale ici.

Disclaimer

AudioValley SA published this content on 08 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 April 2021 09:19:03 UTC.


ę Publicnow 2021
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More news
Financials
Sales 2020 21,7 M 25,4 M 25,4 M
Net income 2020 -5,56 M -6,52 M -6,52 M
Net Debt 2020 16,7 M 19,6 M 19,6 M
P/E ratio 2020 -5,69x
Yield 2020 -
Capitalization 42,4 M 49,7 M 49,8 M
EV / Sales 2020 2,72x
EV / Sales 2021 1,72x
Nbr of Employees 110
Free-Float 71,5%
Chart AUDIOVALLEY
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AudioValley Technical Analysis Chart | MarketScreener
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Technical analysis trends AUDIOVALLEY
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Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 2
Last Close Price 3,26 €
Average target price 5,90 €
Spread / Average Target 81,0%
EPS Revisions
Managers and Directors
Alexandre Saboundjian Chairman, Chief Executive Officer & MD
SÚbastien Veldeman Director-Finance & Administrative
Jean-Francois Mauguit Chief Technology Officer
Mario Cabanas Chief Operating Officer
Xavier Faure Independent Director
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