Bio-Works’s net sales for full year 2019 were SEK 5.6 million, down SEK 1 million from 2018. The decrease is due to the fact that the company’s largest customer in 2018 did not place an order in 2019. In this update, we have looked beyond Bio-Works’s obvious stochastic character of the order inflow as we believe this is symptomatic for all early commercialization stage companies and not a structural problem for Bio-Works as such. Here is our case: the company’s largest customer accounted for SEK 3.8 million of the SEK 6.6 million in 2018 revenues. Excluding the orders from the largest customer, Bio-Works’s revenues for 2018 were SEK 2.8 million. Net sales of SEK 5.6 million in 2019 thus represents a 100% y/y growth. Assuming 100% y/y growth in 2020, net sales would amount to SEK 11.2 million, or SEK 15 million including orders from the largest customer with the corresponding value from 2018. With this said, we deem our forecast to be realistic. In addition, we expect that the company manages to grow their base of customers in scale-up and production phase sufficiently enough during 2020 to begin to show a steady order flow. We maintain the Outperform rating and the target price at SEK 15.8, equal to an equity value of SEK 482 million non-diluted, based on a mix of DCF valuation and peer analysis.
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