WAG Payment Solutions (Eurowag): democratising digitalisation for small truckers (BUY – initiation of coverage)
We initiate coverage on WAG Payment Solutions, known (and trading) as Eurowag, with a BUY and a price target (PT) of GBp 140/share, offering c.59% upside. Eurowag’s product suite enables (predominantly) small road transport operators to digitalise most aspects of their business, such as payments and route planning, as well as regulatory compliance and cash flow management. Digital freight forwarding, i.e. leveraging its platform create a ‘load marketplace’, is the next step forward, we believe. Eurowag’s industry is fragmented, particularly so within the SaaS space, but is consolidating with Eurowag at the forefront. The company is building scale and readying for a cloud-based future, and we believe that investors should see the benefits in earnings (e.g. a 2022-25 adj. EBITDA CAGR of 28%) and FCF in the next 12 months, for example as it converts Inelo’s sizable customer base to Eurowag’s solutions. Even at our PT of GBp 140, the valuations are undemanding. Potential deals with truck makers to include Eurowag’s platform in their standard equipment, would only boost its position as a standard-setter within the industry, but we do not reflect this potential upside explicitly in our forecasts.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
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