First Berlin – ad pepper media International N.V. Research Update (06/02/2020)

First Berlin Equity Research has published a research update on ad pepper media International N.V. (ISIN: NL0000238145). Analyst Dr. Karsten von Blumenthal reiterated his BUY rating and increased the price target from EUR 3.30 to EUR 3.90.

Abstract
ad pepper media International has reported preliminary 2019 figures, which show high single digit revenue and very strong earnings growth. EBITDA amounted to €3.5m and was significantly above the €2.75-3.0m guidance range. All three segments contributed to the EBITDA increase. The EBITDA margin widened from 6.7% to 16.1%, which highlights the company's enormous operating leverage. Liquid funds rose by almost €5m to €25m. Digital performance marketing remains a growth sector and we expect the company to further exploit the operating leverage of its business model. All three segments are in good shape and increased their revenues and margins in 2019. For 2020E, we expect the group to grow by 9% and the EBITDA margin to widen to 16.8%. Given the very strong balance sheet and the expected 2020E free cash flow of >€2m, we believe that the stock is attractively valued at 2020E EV/EBIT of 12x. Both the excellent 2019 figures and growth prospects are not adequately reflected in the share price. We increase our forecasts for 2020E and the following years. An updated DCF model yields a new price target of €3.90 (previously: €3.30). We confirm our Buy rating.