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VSA Capital Market Movers – Samarkand Group


VSA Morning Technology Comment, 04/06/21

Samarkand Group (LON:SMK)

Samarkand Group PLC (LON:SMK) is a London headquartered,  Cross-Border eCommerce (“CBEC”) Group focused on connecting Western brands with China, the world’s largest eCommerce market. Revenues are primarily derived from sales of own and Client health and beauty brands. The Group’s proprietary software platform, Nomad, covers commerce, distribution, logistics, payments and analytics. It provides a more direct-to-consumer route to the world’s largest eCommerce market reducing the risks, costs and barriers to entry.

Samarkand, in a March 2021 IPO, listed on the London based Aquis Exchange and, in an oversubscribed placing, raised £17.0m at 115p per share to support future growth followed by £3.1m in strategic investment by Chinese logistics giant SF Holdings.

At the time of the IPO in March 2021, Samarkand outlined that part of the IPO funds raised would be used towards our international expansion and business development activities. The Group has today announced the formal opening of its office in Tokyo, Japan. This follows the establishment on 25th May 2021, Samarkand Global (Japan) KK based in Tokyo as its subsidiary to serve the Japanese market.

Samarkand specialises in connecting overseas brands with China and sees the Japan-to-China cross border market as an attractive and logical next step in its expansion. The Group is also seeing its European brand partners interested in diversifying their sales to include the Japanese market.

Japan is the world’s 4th largest eCommerce market, and, according to the Group, Japanese brands are highly sought after by Chinese consumers for their impressive design and high-quality products.

Samarkand Global (Japan) is already working with a wide range of Japanese brands to “help make their Chinese eCommerce journey more simple, transparent, and profitable.” The Group has appointed Simon Truss as the Managing Director for Samarkand Global (Japan) and he has been working at the forefront of the Japanese cross border eCommerce and supply chain industry for the past 14 years, having headed up the Japan offices of companies such as Maersk Logistics, Panalpina and most recently China’s largest logistics Group, SF Express.

Samarkand, in our view, provides investors with an excellent opportunity to  gain exposure to an eCommerce platform that provides brands with access to the largest eCommerce market in the world – China. Global retail eCommerce sales are forecast to grow by 16.5% to US$3.9 trillion in 2020 (source eMarketer). China accounted for 54% of the global market with sales up 16.0% to US$2.1 trillion (RMB13.5 trillion).    

Looking to Group, for FY 2022, FY 2023 and FY 2024 respectively, we forecast underlying YoY revenue growth of 67%, 68% and 44% to produce revenues of £22.6m, £38.0m and £54.7m. Investment in growth post-IPO sees an EBITDA loss in FY 2022. For FY 2023, we forecast an EBITDA of £3.3m and margin of 8.8% and, on further strong revenue growth and the high operating leverage of the model, for FY 2024 we forecast an EBITDA of £9.6m and margin of 17.5%. 

Our valuation, on a blended basis, combining Sum Of The Parts (SOTP), peer Group EV/Revenue and EV/EBITDA  multiples together with DCF, values Samarkand at an EV of £151.7m and market capitalisation of £164.3m (given £12.6m net cash at March 2021 end).

Buy. Target price 300p.  

VSA Capital published a full initiation of coverage research report on Samarkand Group Plc on May 11th 2021. Please click here for the full note.



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Phil Smith, Equity Analyst, Technology | T: +44 (0)20 3617 5187 | E: [email protected]

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