Samarkand Group PLC (AQSE:SMK): Full Year Results, Show Significant Growth
eCommerce Software Driving Brand Expansion
Samarkand Group plc (AQSE:SMK), headquartered in London, is a Cross-Border eCommerce ("CBEC") group focused on connecting Western brands with China, the world's largest eCommerce market. Revenues are primarily derived from sales of own and Client health and beauty brands. SMK's proprietary software platform, Nomad, covers commerce, distribution, logistics, payments and analytics. It provides a more direct-to-consumer route to the world's largest eCommerce market reducing the risks, costs and barriers to entry. SMK, in a March 2021 IPO, listed on the London-based Aquis Exchange and, in an oversubscribed placing, raised £17.0m at 115p per share to support future growth. This was followed by £3.1m in strategic investment by Chinese logistics giant, SF Holdings (SF Express).
Full Year Results – Show Significant Growth
SMK today reported Full Year Results for the year ending March 31st, 2021 (FY 2021), which follows a Full Year Trading Update published on June 28th, 2021. Samarkand reported a strong performance for the year with revenue increasing to £20.6m (FY20: £6.8m) including exceptional revenues of £5.8m. In FY 2021, the business moved to EBITDA positive with EBITDA growing to £1.1m (FY20: loss of £0.8m) and this, adding back IPO costs and share option charges of £0.5m in total, is ahead of our forecast of £1.5m. This resulted in a PBT of £0.2m (vs. our £0.1m) and this, combined with a tax credit of £0.2m resulted in a net profit of £0.4m (vs. our £0.1m). SMK’s significant growth has been driven by the continued success of the Nomad platform as well as high levels of social eCommerce revenues in China.
Earnings Aligned with Strong Sector Outlook
Not only does Samarkand provide investors with exposure to this trend, but SMK’s platform enables its clients to access the largest market in the world which they likely could not do alone. We forecast FY 2022 revenue of £22.6m, as core sales rise by 52% YoY, with growth unlocked by recent IPO funding. In FY 2021, SMK’s Technology segment achieved revenue of £6.4m up from £1.5m. We see strong social commerce related brand sales ahead, with Technology segment sales up by 70% to £10.8m in FY 2022.
Recommendation & Target Price
We reiterate our Buy recommendation and are raising our 12-month Target from 300p/share to 326p/share.
Phil Smith, Head of Technology | T: +44 (0)20 3617 5187 | E: psmith@vsacapital.com
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