International growth continues
International sales showed continued strong growth for Store Electronics (SESL.PARIS) in Q114; 66% up y-o-y to €9.8m. However, domestic sales declined 4% y-o-y, which management attributes to retailers holding back on large investments. Total revenue growth of 22% y-o-y is consistent with our forecast annual growth rate and should accelerate as international sales become a larger proportion of the total. Imagotag (if the acquisition is approved by shareholders) could also contribute up to €5m in revenue in H2, which we have not yet incorporated into our estimates.
The Q1 results announced yesterday showed strong growth in international sales, which more than compensated for a comparatively weak domestic market. Management expects domestic sales to improve over the year however, and to end the year up y-o-y overall. The international market opportunity is expected to continue to drive growth as it becomes an increasingly significant proportion of revenue (51% of Q114 revenue vs 37% in Q113). Sequentially international sales were down €4.5m but this is primarily due to the completion of a large project in Scandinavia in H213, which makes the q-o-q comparatives difficult to beat. The outlook remains encouraging with a strong order intake (€22m) and the potential acquisition of Imagotag, if approved by shareholders at the AGM on 21 May, could provide upside to our estimates. We will update our forecasts to Include Imagotag following a successful outcome of the AGM. For now our estimates and valuation remain unchanged.
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