CentralNic Group - Strong growth going largely unrewarded

After a strong H121, management expects CentralNic to deliver revenue and profits for the year ‘at least at the upper end of market expectations’. Following its FY20 investment programme, the company delivered 20% y-o-y organic growth in H121 – 16% in Q121 and 25% in Q221, with all business lines contributing. Reflecting continuing strong growth, we have raised our FY21 and FY22 revenue targets to US$350m and US$379m, respectively, while adjusted EBITDA rises slightly to US$41.1m and US$45.2m. On our revised estimates, CentralNic’s shares trade on an undemanding FY21e EV/adjusted EBITDA of 10.0x and P/E of 12.9x, well below its web services and online marketing peers, despite its FY15–20 revenue CAGR of 78% and our estimate for current year growth of 45%.