Project Description

CDON AB Notes

January 22, 2021 Update

  • CDON AB is a Nordic ecommerce third party marketplace
  • Resources:
  • Bull case:
    • CDON is the leading Nordic e-com third party marketplace in the Nordic market.
    • 80% of CDON’s biz is third party products (they also sell their own products), but its going to 100%. Company is focusing on its because growing much faster.
    • Nordic market is experiencing the same secular shift to ecommerce that is happening everywhere, but is a little behind.
    • Gross merchandise volume (GMV) is 2BN SEK for 2020 growing 100%. CDON has an EV of 2.4BN SEK so CDON is trading at 1.2x EV/GMV.
      • Comps trade higher: MELI-5x, ALE.WSE-2.7x, OZON-4.9x
    • How big can GMV get?
      • Nordic ecommerce market is 250BN SEK and growing 10% per year.  Should be over 400BN SEK by 2026.
      • CDON currently has 1% market share.
      • If CDON is able to grow market share to 5%-10%, it should have GMV of 20BN SEK to 40BN SEK.
    • What is earnings  power?
      • Assuming take rate of 12% inline with other marketplaces, should generate revenue of 2.4BN to 4.8BN SEK by 2026.
      • EBIT of 1.2BN to 2.4BN by 2026 (marketplaces generally have EBIT margins of 50%+)
    • What is upside?
      • Assuming 15x EBIT multiple (EBAY trades at 13x with slower growth), CDON should trade between 3,000 SEK and 6,000 SEK vs. 447 today.
  • What is the risk/pushback/bear case?
    • Do Nordic people actually like/use the product?