This report is an updated version of the report published on 10 May 2022 at 08:11 AM GMT+1.

Tremor International Ltd (LON: TRMR)

Tremor International Ltd. is an FTSE AIM 100 index listed Company focused on digital advertising, including video, mobile, native, display technology, and connected TV. The Company was formerly known as Taptica International Ltd. TRMR is a worldwide leader in Video and Connected TV ("CTV") advertising, as it offers an end-to-end technology platform that enables advertisers to expand their reach.

On 17 May 2022, the Company will release Q1 FY22 results.

Growth Prospects

• Recent Partnerships: On 19 April 2022, Tremor announced the expansion of the TV Intelligence solution in partnership with Fyllo (provider of data-driven marketing and regulatory solutions). Previously, on 8 April 2022, Tremor also announced an agreement with Comscore to deliver expanded programmatic CTV audience engagement. Besides, it also added 42 new US supply partners during Q4 FY21 across growth verticals in sports, entertainment, and lifestyle.
• Share Buyback Programme: The Company had announced its intention to return excess cash of USD 75 million through the implementation of a share buyback programme that commenced on 01 March 2022 and will continue until 01 September 2022.

Key Risks 

• Low Economic Growth: The toxic cocktail of rising interest rates and lower economic growth worldwide caused a significant decline in global equities.
• Decline in Advertising Activities: The widespread global supply chain issues had limited the advertising activity in Q4 FY21 in certain verticals such as automobile manufacturing.
• Bank of England Warning: The Bank of England had trimmed its economic growth forecast for 2023 and is expected to show a contraction of 0.25% from a previous estimated growth of 1.25%. Moreover, it had also warned of UK inflation reaching around 10% very soon.

Key Fundamental and Shareholders Statistics of Tremor International Ltd.

Mithaq Holding Company is the most significant shareholder as it holds nearly 34.03 million shares.

Financial Highlights (for the year ended 31 December 2021, as of 24 February 2022)

(Source: Company Filings)

• Top-Line Business: The top-line revenue grew by around 61% during FY21 and increased by around 26% during Q4 FY21.
• Net Retention Rate: The Company’s customer net retention rates reached 150.3% during FY21.
• Balance Sheet: TRMR has net cash of USD 367.70 million as of 31 December 2021.

Share Price Performance Analysis

(Source: Refinitiv, Research done by Kalkine Group)

On 09 May 2022, TRMR’s shares were closed at GBX 417.40, down by around 9.38% against the previous day closing price. Stock 52-week High and Low were GBX 870.65 and GBX 416.40, respectively.

On a daily chart, the stock price is sustained around the lower Bollinger band. Hence, there could be an uptick in the stock price in the near term. Also, the 14-days RSI of ~21.15 illustrates an oversold territory.

Valuation Methodology: Price/Earnings Approach (FY22E) (Illustrative)

Business Outlook

TRMR has ended FY21 on a good note with record adjusted EBITDA and around 61% revenue growth. Moreover, the Company had managed to strengthen its end-to-end platform and CTV capabilities through two strategic deals in the fourth quarter. In terms of guidance, TRMR expects to report a Contribution ex-TAC (“traffic acquisition costs”) of at least USD 73 million and adjusted EBITDA of approximately USD 33 million for Q1 FY22. In a nutshell, TRMR remained confident about the outlook and well-positioned to further benefit from the anticipated ongoing resurgence in the global digital advertising industry.

Please note markets are trading in a highly volatile zone currently due to certain macro-economic and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Considering the record profitability during FY21, recently completed acquisitions, robust revenue growth, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Tremor International Ltd at the closing market price of GBX 417.40 (as of 09 May 2022), with lower-double digit upside potential based on 8.49x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and is subject to the factors discussed above.

Note 3: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 4:  Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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