White Pearl - Research Update H1 2024

Despite the uncertain economic environment, the Group managed to increase organic sales by 20% to 139 (117) MSEK and reached an EBIT-result of 19,8 (17,1) MSEK. The growth is driven by continued high demand for the company’s products and services, with all business areas contributing. Excluding Ayima (see below), revenue was in line with our expectations, while the result exceeded our projections.

During the first half of the year, the Group signed a large contract with a South African government agency worth 118 MSEK. The agreement spans two years (with an impact starting already in Q2 2024) and includes both IT support and implementation services. Furthermore, WPTG continues to expand its business through acquisitions. During the first half of the year, a letter of intent was signed to acquire a majority in OneBrain – a company that develops software for work processes. Even though OneBrain is a relatively small company, we believe other companies within the Group can benefit from marketing their software.

For the full year, the management expects a 25% growth, which implies a forecast for accelerating revenue growth during H2. Out of caution, our forecast assumes a slightly lower revenue growth (+21%), which is marginally below the Group's own forecast. Based on the EBIT-margin in the first half of the year, this would result in a profit that implies the stock is trading at a P/E ratio of only 3x for the current year. The market’s distrust of the Group thus remains significant. We estimate that this distrust will gradually disappear as the Group continues to report growth and results as outlined above. For 2025 and 2026, we forecast growth of 17% and 14% per year, respectively. At the same time we see conditions for an even higher margin level. Based on our new forecasts, a DCF valuation gives a market value of 250 MSEK or 9,4 SEK per share, which should be compared to the current share price of 3,5 SEK.

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