Talenom - CMD notes

Talenom’s CMD provided an all-around update with limited new information given the announcements in Q3. The core business continues to perform well, and further automation of the accounting production line is sought, while domestic growth is increasingly driven by acquisitions.

Largely business as usual
Talenom held its Capital Markets Day on November 11th. Having already announced the new small customer concept and potential plans to expand in Europe in conjunction with the Q3 report the CMD in our view offered rather limited new information, mainly adding some more details to the aforementioned matters. Focus is being set on further increasing the degree of automation in the accounting production line, with a target of over 90% in 2023, currently slightly over 70%. The performance of the core business remains solid and customer acquisition is holding up quite well given the circumstances. Talenom is domestically clearly adding emphasis on inorganic growth, with the digitalization challenges faced by small accounting firms providing opportunities for acquisitions.

New growth avenues with the long-term in mind
Talenom gave some insight into its approach for a potential expansion in Europe and has clearly given it some serious thought. The plans are clearly intended for continued growth in the long-term and any notable revenue during 2021-2022 would most likely be due to acquisitions in a similar manner to the Swedish market entry. The TiliJaska small customer concept is expected to leave beta and add on bank services in Finland during February-March 2021 and enter beta in Sweden in mid-2021. The interest for the system has to our understanding so far clearly exceeded expectations.

HOLD with a target price of EUR 10.2
We have not made revisions to our estimates based on the CMD. We expect 2020 revenue and EBIT of EUR 65.5m and 13.1m respectively (co’s guidance EUR 64-68m and EUR 12-14m respectively). We retain our HOLD-rating and target price of EUR 10.2.

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