CDON AB Notes
January 22, 2021 Update
- CDON AB is a Nordic ecommerce third party marketplace
- 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?