LHV Institutional 'TextMagic Initiation of Coverage, December 20th, 2021'
* TextMagic AS provides text messaging services internationally, enabling its clients to send information via a SMS platform. The activities of TextMagic were initiated in 2001 with the founding of TextMagic Ltd. in the UK. However, the Group as it exists and operates today was formed only in 2021 as a result of a restructuring process. The current and operating product of TextMagic is an application-to person (A2P) SMS platform, which permits sending of notifications, alerts, reminders, order confirmations, carrying out SMS marketing campaigns, surveys, 2-way chats, and 2-factor authentication. TextMagic is also working on the development of a new product, customer engagement platform – Touchpoint. The new platform connects various communication channels and is attempting to cover the needs and preferences of more customers. The new platform is planned to be launched in 2023. The Company raised EUR 2.5m via an IPO in December 2021.* We have approached the valuation of TextMagic using a combination of the income and market approaches. For the income approach, we used the Discounted Cash Flow model. For the market approach, we used a peer group valuation, which considers several peer group trading multiples for 2021-2023E and applies the peer group median valuation multiples to the respective financials for the Group. In terms of the peer group, we used three different market multiples for comparison, including EV/EBITDA, EV/Sales, and P/E. Please note that our valuation for TextMagic is calculated on a post-money basis as at the end of 2021, including the proceeds from the IPO in the financial projections. Overall, based on our current projections for TextMagic and other assumptions, we initiate the coverage on the stock, setting our fair value range (‘FVR’) for the Group at EUR 8.0-9.0 per share.
* This report contains a full set of financial forecasts and is useful for gaining an initial insight into the company. Please also refer to the tables and charts in the attachment.
LHV Bank is an independent pan-Baltic bank, based on Estonian capital. The company was founded in 1999 by two founders of Hansapank (today’s Swedbank in the Baltics) and has been offering a full range of investment services for 15 years. In May 2009, LHV received a credit institution licence allowing it to provide all banking services.
The head office is situated in Tallinn, Estonia. Cross-border services are offered in Vilnius, Lithuania and in Riga, Latvia. LHV provides brokerage (institutional and retail), asset management, banking and capital markets services. Compared to other banks, we are more innovative and have more solid experience in investment and entrepreneurship.
The Bank, together with the Group asset management company employs over 320 people. LHV Group shares are listed on Nasdaq Tallinn.
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