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    LLN   ES0105089009

LLEIDANETWORKS SERVEIS TELEMĀTICS, S.A.

(LLN)
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Lleidanetworks Serveis Telemātics S A : Checkpoint ˇ Avril 2021

04/20/2021 | 03:20am EDT

Lleida.netBUY

The shining light of profit growth

Analyst: Guillermo Serrano gfs@checkpointp.com

Lleida.net has reported a 1Q21 475% increase in profits before tax to €391k, stemming from a mixture of continued strong SaaS performance (+46%) and lower cash operating costs (-3%) and despite the ICX weakness (-25%) that we already saw in 4Q20 (-23%).

Undoubtedly the high margin SaaS division is emerging as the main locomotive of Lleida.net following the surge of Covid related demand for on-line contracting and notification services.

The post-Covid outlook remains bright as companies realise how efficient and cost effective the digital alternative is compared to the use of ordinary mail. Our SaaS forecasts for 2021 point towards an annual growth of 67% for a total of €9.5 million.

ICX (wholesale SMS) has had a very weak quarter again (second in a row) due to a combination of a shrinking market (tourism and travel are a significant component of demand), rising termination fees (telco operators leveraging their monopoly power to balance out dwindling roaming revenues) and the resulting increased competition. We are lowering our ICX revenue 2021 forecasts from €9,1 million to €7.9 million, with a relatively small €300k impact in our cash Ebitda expectations.

The SMS solutions (mainly Spanish corporate clients) division grew some 4%, in line with our expectations. Interestingly this division has remained largely unaffected by Covid.

The financial position of the company remains strong and largely unchanged at €2.2 million net cash position.

We remain positive on Lleida stock with a BUY recommendation and maintain a €11.15 target price (a €0.20 drop vs prior report, as a result of ICX) providing an 79% upside over the next 12-18 months.

7am, 20th April 2021

Equities

Spain

Telecom/Software Services

Price (4 pm 19/4/21):

€6.24

(LLN.MC),

€6.11

(ALLLN.PA)

$7.40

(LLEIF)

Target Price:

€11.15

Trading Data

52 week range (€):

1.69 - 10.40

Mkt Cap (€ millions):

100.2

No. Shares (millions):

16.04

Avg Daily vol (€ LTM):

855k

Share Price Chart (LTM)

12

10

8

6

4

2

0

-20

-20

-20

-20

-20

-20

-20

-20

-20

May

Jun

Jul

Aug

Sep

Oct

Oct

Nov

Dec

(€ millions)

2019

2020

2021f

2022f

Turnover

13,7

16,5

20,2

26,5

Ebitda (cash)

1,3

2,0

3,9

6,8

Net Profit

1,1

1,0

3,3

5,6

EPS

0,07

0,06

0,20

0,35

CFPS

Net Debt

1,1

-2,2

-4,4

-9,0

7,4

5,9

4,8

3,4

EV/Ebitda

74,0

49,4

24,8

14,4

P/E

92,2

98,0

30,5

18,0

FCY

1%

2%

4%

6%

This report has been prepared by Checkpoint Partners (España) SLU

CHECKPOINT

Disclaimer:

Checkpoint Partners (España) SLU [Checkpoint] is a Madrid based specialist corporate finance company specialized on providing financial advice to emerging technology companies. More information can be obtained in our website www.checkpointp.comor by writing to us at gfs@checkpointp.com

Checkpoint has obtained this information from various sources including the company mentioned in this report. It has been verified to the best of Checkpoint's ability, however it has not been independently verified and no representation is made, nor warranty given as to the accuracy, completeness, or the reasonableness of any statements of opinion, belief or the achievability of any forecasts or projections contained within this report.

Checkpoint does and seeks to do business with companies covered in its research reports. As a result, investors may take the view this could affect the objectivity of the report and therefore should consider this report as only a single factor in making their investment decision.

Furthermore, this report has been written in accordance to the Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest.

Checkpoint does not provide advice with regards legal and tax matters. This should be referred to the appropriate professionals. Past performance is not a guarantee for future returns. Currencies denominated investments are subject to fluctuations in exchange rates that could have an effect on the Investor's return. Prices of investments may fluctuate and therefore you may not get back your original investment. The distribution, reproduction or other use of all or any part of this report is prohibited. Neither this report nor any of the accompanying documents or information may be reproduced in whole or in part, nor may they be used for any purpose other than that for which they have been submitted, without the prior written consent of Checkpoint. This documentation is only available within the European Economic Area.

2

Checkpoint 7am 20th April 2021

CHECKPOINT

Can Lleida.net compete with DocuSign? The quick answer is YES

The evidence during the present and past quarterly results are undeniable proof there is a growing demand for Lleida.net services, although some observers are concerned the US based DocuSign may pose a competitive threat to a much smaller Lleida.net.

We have analysed DocuSign and Lleida.net comparatively from an operating and financial perspective. On both counts we believe Lleida.net stands its ground despite the difference in size.

1. OPERATIONAL COMPARISON

From an operational perspective, there are five main differences between the two companies that suggest they are not in a collision course with each other, anytime soon:

  1. Notification services: DocuSign is an Agreement based service centred service built around the e-signature whereas Lleida.net draws its revenues primarily from its certified notification services. This 1Q21 LLN reported 355k Click & Sign API transactions (related mostly to the signing of contracts) and some 3.7 million certified emails (related to notifications). In addition, Lleida.net provides KyC services that DocuSign does not.
  2. B2B vs B2B2C: DocuSign is a very standardized off-the-self product that fits well into small volumes of documents being signed, which would be the norm in a B2B environment. Lleida.net specializes in large volumes of contracts such as the ones banks, insurance companies or utilities sign with the millions of customers (a B2B2C environment). As such Lleida.net has the in-house capability to adapt its service to the requirement of its clients and not the other way around.
  3. Geographical focus: DocuSign generates 80% of its revenues in the US given its e-signature product has been designed based on the US legal system requirements. More than 50% of Lleida.net´s revenues are generated outside Spain and its SaaS services have been designed from a high-burden-of-proof standpoint that adapts well into every legal jurisdiction around the world.
  4. Pricing of services and cost base: We know that DocuSign lost over $200 million in their fiscal year 2021 (calendar year 2020) and their pricing per-contract- signed in their monthly fee pricing offer is more expensive than Lleida.net´s and yet Lleida.net runs a profitable operation, which suggests its cost base is far more competitive.

3

Checkpoint 7am 20th April 2021

CHECKPOINT

DocuSign website

Source: DocuSign. Photo taken on 19th April 2021

On the DocuSign website above you may notice that window on the right is written in Portuguese and provides a customer phone number in the UK, on the Spanish language website. Whereas those mistakes may be corrected over time, it comes to show the main focus for DocuSign is probably still the US and at best English speaking jurisdictions.

Lleida.net website

Source: Lleida.net. Photo taken on 19th April 2021

The Lleida.net (above) Click & Sign product provides the corporate customer with a broader range of alternatives compared to DocuSign, with the comparable basic product at approximately half the price.

4

Checkpoint 7am 20th April 2021

CHECKPOINT

  1. Telecommunication services: DocuSign is strictly a software company and a very successful one at that. Lleida.net is a telecom and software services hybrid, providing that extra level of certainty from a legal perspective given that its legal standing as a telecom operator is that of a Trusted Third Party in the eyes of the law. This is particularly useful in high burden of proof legal jurisdictions.

Whereas any company with large amounts of available capital may be able to enter a market and displace the incumbent player, we believe DocuSign will continue to focus on its existing business lines essentially because growth remains strong. In the short term it has little incentive to shift it attention or change its business model for the sake of wiping the 70x smaller Lleida.net out of the map.

Instead, Lleida net has found its own corner in the contract and notifications market, servicing large volume users with lower prices and a high capacity to adapt to each of their client needs. Moreover, its competitive position is also protected by its proprietary patent families which should provide comfort to existing and prospective investors.

2. FINANCIAL COMPARISON

From a capital efficiency perspective Lleida.net excels relative to DocuSign. DocuSign is a much larger enterprise because there has been more money thrown into the company, but the data shows Lleida.net has been far more efficient with the use of its capital.

In both their lifetimes, some €1.7 billion (€1.4 billion) in equity investment has gone into DocuSign compared to €6 million in Lleida.net, 230x more, which clearly shows the difference in scale between the two companies. In terms of revenues, last year DocuSign generated $1.5 billion (€1.2 billion) compared to Lleida.net that reported some €16.5 million, 70x more.

This means that for every dollar of equity raised by DocuSign it generated $0.85 of sales in 2020. In the case of Lleida.net, for every €1 in equity injected, Lleida.net delivered €2.75 in sales last year. DocuSign is loss making and Lleida.net is profitable, which sums up performance to date in favour of Lleida.net.

Despite the differences in actual operating returns, the particulars of the US equity market place DocuSign on an 2020 EV/Sales of around 26x, whilst the market places a 6x multiple on Lleida.net´s stock. From a revenue guidance perspective DocuSign guidance is pointing towards 35% growth in 2021 (fiscal year 2022 since they account from February to January) compared to our forecasts of 22% growth for Lleida.net. Not even the differences in growth expectations can account for such a large disparity in the valuation.

5

Checkpoint 7am 20th April 2021

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

Disclaimer

Lleidanetworks Serveis Telematics SA published this content on 20 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 April 2021 07:19:09 UTC.


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Financials
Sales 2020 17,7 M 21,5 M 21,5 M
Net income 2020 - - -
Net Debt 2020 1,24 M 1,51 M 1,51 M
P/E ratio 2020 43,7x
Yield 2020 0,16%
Capitalization 95,1 M 116 M 116 M
EV / Sales 2020 5,45x
EV / Sales 2021 4,77x
Nbr of Employees 80
Free-Float 62,5%
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Technical analysis trends LLEIDANETWORKS SERVEIS TELEMĀTICS, S.A.
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Income Statement Evolution
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Mean consensus BUY
Number of Analysts 2
Average target price 10,08 €
Last Close Price 6,21 €
Spread / Highest target 93,2%
Spread / Average Target 62,3%
Spread / Lowest Target 31,4%
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Managers and Directors
NameTitle
Francisco José Sapena Soler Chairman & Chief Executive Officer
Arrate María Usandizaga Ruiz Chief Financial Officer, Executive Director & CAO
Jordi Ramķn Piņol Chief Technical Officer
Manuel Gallo Chief Operations Officer-EMEA
Eva Pane Chief Compliance Officer
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