Crayon - new target price 252

You are smart if you listen

Question 1: Is it realistic for the Crayon share price to move from 115 to 252 when the share already is up 44% in 2024?

It's the wrong question - it's too short sighted. We have spent a lot of resources again on our "top pick" in the market and here is our perspective on that question:

·     4 years ago, Crayons share price was 110, and the company is 3x the size today. It's a fact.

·     Working capital questions are history. It's almost a fact.

·     Consulting business (28% of gross profit LTM) is improving as we speak. You saw it in Q2.

·     Scalability is demonstrated and margin improvement is coming. It makes sense.

·     Company guiding has been prudent last 5 years or more. It's a fact.

·     Crayon is in the middle of a megatrend where market is growing rapidly. It will continue.

·     Crayon has a strong balance sheet and profitability is accelerating. Fact again.

·     They are stupidly low priced relative to peers despite higher organic growth. It's a fact.

·     Some shit will happen, which is modelled into our estimates. Management will react fast.

Question 2: What do we expect in Q3 and Q4 2024?

We expect "only" 15,9% Gross profit growth and an EBITDA margin sized 14,2% since Q3 is seasonality a "weak quarter". In Q4 it will pick up to 23,1% growth and an EBITDA margin of 22,6%.

We will then end up with 17,6% growth and an EBITDA at 19,1% in 2024. Please note that we are not at all bullish compared with analysts on Q3 but slightly ahead in Q4. Working capital is not an issue but it will be good in H2. Read this answer one more time and decide whether you should buy Crayon now or wait for Q3 and Q4 😅

Question 3: Why should you listen to Hvaler Invest AS on Crayon?

Well, we spend lots of resources on our 4 biggest investments (Crayon is our top pick) and we have recently predicted a similar share price development on another profitable growth compounder - Protector Forsikring ASA (previously our top pick).

We were the first to say target price "200" (26.06.2022 when the price was 102), then first to say "271" (31.05.2023, when the share price was 170) and the first to say "343" (16.07.2024). Today the share price is 290 and all analysts are moving north of 300). It's our opinion that history will repeat itself, but now in another growth compounder, Crayon.

We have often compared Protector with:

but we think this gentleman is more relevant for Crayon:

Why? Simply because we think that Crayon can further develop from being nr 5 world-wide in their business to end up as a future champion 🥇

They will encounter some hurdles on their way but with hard work and discipline, it's possible for a Norwegian company to be nr 1 in the world.

Disclaimer: Hvaler Invest is a significant shareholder so you cannot trust us (or perhaps you can?)

Best regards,

Sverre and David.

Lillestrøm, Norway. 30.10.24.