Movinn Q3-23

Improved Profitability in Sight

Movinn A/S (“Movinn” or the “Company”) continued to demonstrate growth during the third quarter of 2023, amounting to 9% Y-Y. However, margins continue to be impacted by high vacancy rates, with the EBITDA margin (from operations) reaching 1.4%. The Company has taken measures to enhance profitability, which, combined with a more favorable macroeconomic environment, is expected to strengthen profitability starting from Q1-24. With an estimated EBITDA of DKK 8.9m in 2024, an applied target multiple of EV/EBITDA 15x, and a discount rate of 10.9%, a net present potential value per share of DKK 6.5 (7.5) is derived in a Base scenario.

• Revenue per Unit Remains Robust in a Tough Market

Movinn’s revenue amounted to DKK 21.2m (19.4), corresponding to a growth of 9% and 4% below our estimate of DKK 22m. Aarhus and Odense continues to face challenges regarding demand, which translates to high vacancy rates on the Danish units, amounting to 17.3%, compared to the same period last year of 8%. However, the revenue per unit continues to remain strong, amounting to DKK 199k, which we anticipate will increase to DKK 205k in 2024, as vacancy rates decline, thereby contributing to stronger revenue.

• High Vacancy Rates Continues to Tear on Margins

EBITDA from operations amounted to DKK 0.3m, compared to our estimate of DKK 1.4m, corresponding to a margin of 1.4%. The high vacancy rates continues to affect margins as the variable costs, which mostly consists of rent paid to landlords, has risen in relation to revenue. Moreover, staff costs was slightly higher than estimated in Q3-23, owing to a rebuild within the sales organization during Q2-23, which also has affected the costs in Q3-23. Movinn has taken actions to improve profitability, including downsizing in Aarhus, where the Company will remove 13 of the 43 units from its portfolio that are underperforming, which is expected to improve vacancy rates and save costs. On a positive note, the Swedish market is performing well and is close to break-even, where the vacancy rate amounted to 3.6%, which indicates that Movinn is effectively managing demand in the Swedish market.

• Updated Valuation Range

With the Q3-report presented, it is evident that Movinn continues to operate in a challenging market, especially in the Company’s secondary Danish markets Odense and Aarhus. We assess that Movinn is making the right move by downsizing underperforming markets and instead expanding in markets with stronger performance to increase profitability. However, it is expected that the high vacancy rates will persist into the beginning of 2024, resulting in a slightly lower revenue and profitability. In light of this, we have updated our financial forecasts for Movinn, which also leads to an adjusted valuation range for all three scenarios: Base, Bull, and Bear.