LHV Institutional Baltic Insight, July 6th, 2020

* Considering the heightened risks and uncertain economic developments related to the coronavirus pandemic, HansaMatrix (‘HMX’ or the ‘Company’) decided to announce its preliminary Q2 2020 sales figures ahead of publishing of the full quarterly report scheduled for 20 August 2020. The Company followed the same practice after Q1 2020. According to the announcement, HMX recorded preliminary revenues of EUR 5.26m for Q2 2020, down 11.9% y-o-y. According to the management, revenues are normally spread quite evenly across months in Q2. The main COVID-19 related factors hurting the Company’s revenues are listed as follows: personnel safety issues, supply chain disruptions, and weakening of customer demand.
* The latest comment reiterated the Company’s cautious approach towards the outlook, saying that it is still too early to estimate the potential impact of the COVID-19 situation on Q3-Q4 2020 results. We acknowledge that considering Q1-Q2 2020 revenues, HMX may not reach our full-year 2020 sales and profit estimates. However, we remain optimistic regarding the Company’s longer-term prospects and do not rush to adjust our valuation for the stock.
* On the positive side, we are expecting additional news from an affiliated start-up company of HMX, LightSpace Technologies (‘LightSpace’; HMX holds 49.86%). LightSpace recently announced that it plans to complete product design and industrialisation of the newly developed 3D AR headset by the end of 2020 and start manufacturing at the beginning of 2021. We consider this as exciting news, as LightSpace should be able to start monetising its novel technology next year. Although we will keep a close eye on the Company’s developments for potential downward revisions in terms of its core operations, LightSpace developments should brighten the outlook for HMX and compensate for any near term setbacks caused by the coronavirus. Please also refer to the tables and charts in the attachment.