Edison Investment Research - CentralNic Group (CNIC) CentralNic Group - Sustained growth, benign outlook

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Edison Investment Research

Richard Williamson

CentralNic Group - Sustained growth, benign outlook

CentralNic has continued to trade strongly, both during lockdown and afterwards. Benefiting from its FY20 investment programme, the company delivered 9% organic growth in FY20, 16% in Q121 and now 25% organic growth in Q221, with contributions from all business lines. As a result, management expects to deliver revenue for the year ‘well ahead’ of market expectations, with profits ‘in line’ with consensus. As investment normalises, management expects future periods (we interpret this to mean FY22 and beyond) to benefit from increasing operational leverage. CentralNic’s shares trade on an undemanding FY21e EV/adjusted EBITDA of 9.9x and P/E of 13.5x, which does not appear to reflect the growth the group delivered over lockdown in FY20 or its future prospects. We intend to review our estimates with the H121 results due on 31 August 2021.

27/07/2021 1 EN

Underlying

CentralNic Group

CentralNic Group is a holding company which provides global domain name services. Co. provides Wholesale, Retail and Enterprise services and consultancy for new Top Level Domains (TLDs), Country Code TLD's and Second-Level Domains and it is the owner and registrant of a portfolio of domain names, which it uses as SLD domain extensions and for resale on the domain name aftermarket. The Wholesale Division powers domain names and sells them via an integrated network of third party retailers; the Retail Division sells domain names and related services to end users; and the Enterprise Division sells domain names and related services, consultancy services and licenses software to corporations.

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GB00BCCW4X83 London Stock Exchange United Kingdom

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Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Analysts

Richard Williamson

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