ZetaDisplay: Penser – Continued growth in 2013

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| Source: ZetaDisplay AB (publ)
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Sweden, 2014-03-04 09:05 CET (GLOBE NEWSWIRE) --  

Sales somewhat below our expectations

ZetaDisplay reported sales of SEK 16.8m (17.6) in Q4, representing a decrease of 4% compared to the same period last year. It should be added that growth in Q4 2012 was very strong, and amounted to 174%. We anticipated sales of SEK 19m in Q4 2013. The company indicates that the influx of inquiries from new customers has been good during the quarter, but did not really come up in line with the same period last year. The gross margin increased during the quarter and amounted to 52 %, compared with 47 % in the previous year. Operating profit amounted to SEK -2.0m (-1.2), which was somewhat below our estimate of SEK 2m. The company states that its international expansion was the primary reason for the slightly higher cost base. Profit after tax amounted to SEK -2.1m (3.2).

Launch of system support for multi-channel communication

During the quarter, the company launched system support for multi-channel communication through its ZetaPlay service. This a service that makes it easier for retail chains to reach their customers wherever they are. The aim is to adapt the message to whatever channel the store chooses to engage in dialogue through. This is a step in the right direction for the company to increase the share of licensing revenues. During the quarter, ZetaDisplay also entered into an agreement with Mercedes-Benz Sverige AB to supply media platforms for Last Meter Marketing and Digital Signage. We still calculate the company needs annual sales of about SEK 65-70m to meet its fixed costs. Our view is that the cost level in the company going forward will be level with Q4 2013 in early 2014. However, we expect a positive operating profit before depreciation and amortisation for Q1 2014, driven by continued growth in installations, software and services.

We are lowering our earnings forecast for 2014E

We are lowering our estimates for 2014E EPS, given somewhat lower sales and a higher cost base from the company’s expansion in Europe than we had previously anticipated. With a steadily growing installed base and a continued strong flow of inquiries from both existing and new customers, we expect profit in 2014 for ZetaDisplay. Uncertainty, and thus probable deviations from the forecasts, is large given the quarterly and annual fluctuation in margins and revenues. On our 2015E forecasts, ZetaDisplay is traded at P/E 5.9x, which we find attractive. For 2015 and onwards, we see good growth potential for both the underlying market and ZetaDisplay.

The whole analysis is attached to this press release and can also be downloaded at http://www.penser.se/epaccess/zetadisplay

 

If you have questions, please contact:

ZetaDisplay AB (publ)
CEO Leif Liljebrunn
Telephone:
+46 70 845 80 52
E-mail:
leif.liljebrunn@zetadisplay.com

About ZetaDisplay

ZetaDisplay is a leading supplier of Digital Signage to major chains in the retailing and service sectors of the European market.

The head office is in Sweden and there are sales offices located in Denmark, Norway, Finland, Estonia and the Netherlands. Since April 2011 the company’s shares have been traded on NASDAQ OMX First North Premier, using the ZETA abbreviation. The Certified Adviser is Erik Penser Bankaktiebolag and the liquidity guarantor is Pareto Öhman. More information can be found at http://www.zetadisplay.com

About Digital Signage and multi-channel communication

ZetaDisplay defines Digital Signage as a system for advertising, profiling and retail store communication, which forwards audio, images and film related to retail stores and information in the public environment. A Swedish name for Digital Signage translates as digital retailing communications. Solutions based on digital displays form a large part of the market, but development is proceeding towards the utilisation of more digital channels to communicate customer offers and other information. This is a matter of solutions that are integrated into social media and web sites, and apps for smart mobile phones and tablets which create interaction with customers. Development is also progressing towards integrating solutions with retailers’ cash desks for automatic price updating and the automatic switching of offers on the digital displays.