Pilulka Lekarny: Riding the e-commerce wave – soft coverage (NOT RATED)

Pilulka is a Czech multichannel consumer healthcare and pharmacy retailer, with an online presence in Slovakia and Romania. Online channels generated c.70% of its revenues last year, in markets where e-commerce is expected, by Euromonitor, to grow at a 5Y CAGR in the mid-to-high teens. The rising penetration of online consumer healthcare and personal care spending should drive even higher growth rates, we believe. The pandemic shutdown was a boon for the business: Pilulka saw its revenues jump by 47%, and it achieved positive EBITDA. Management projects a 2020-24E revenues CAGR of 29% and EBITDA margin expansion to 4%, from 2020’s 1.3%, implying an EBITDA CAGR of 72%. This environment should be supportive for continued growth, in our view, but we note that, on management’s guidance, the stock trades in line with its peers on 2023E EV/EBITDA, i.e., already discounting its 2020-23E EBITDA CAGR of c.87%, on the company’s guidance, vs. the peer median of c.20%, on the consensus estimates.