Sostravel.com (BIT:SOS) Research Update

Highlights:

• Arrowhead is updating coverage on SosTravel.com with a fair value bracket of EUR 2.0 to EUR 2.5 (share price on November 15, 2022: EUR 0.89) based on blended valuation using Discounted Cash Flow (DCF) method (60% weightage) and Comparable Company Analysis method (40% weightage)
• SosTravel.com S.p.A., headquartered in Italy, is a digital travel company that operates in the global travel and tourism industry. The company was founded in 2017 as a spin-off from TraWell Co. (previously Safe Bag). It has a presence in 23 airports, where it markets its services
• The company aims to seize the significant opportunities offered by mobile technology in a highly fragmented air passenger services market, with no major player offering an integrated solution to meet the key needs of air passengers
• The company’s target is to build a one-stop digital platform that provides travel services for passengers using various modes of transportation, i.e., air, rail, road and sea
• To build a super app, the company recently merged with Digital Destination Company S.r.l. (“DDC”), which is an Italian start-up company with a strong expertise in digital marketing for traveling and has an established booking platform
• The company plans to capture new users and cross-sell its proprietary value-added services, powered by its strategic merger with DDC, which will attract potential customers with low-margin services, and bookings and offer high-margin services through the app, focusing on the Leisure Travel segment, thereby giving a new direction to the company’s business and services in the future
• The company plans to expand the commercial partner to expand its service portfolio, which is in line with the company’s strategy of setting off a network effect where more services would attract more clients, which, in turn, would attract more commercial partners and make the company’s marketplace more vibrant
• The company recently announced the appointment of Mr. Carmine Colella as Chief Executive Officer. He has over 20 years of experience in the Travel and Tourism industry
• The company had a revenue base of EUR 1.3 mn in FY 2021, up 44.4% on a year-on-year (YoY) basis. However, the merger with DDC will further add EUR 10.8 mn to its top-line for 2021. As on June 30, 2022, c. 1.22 mn users worldwide used SOS as a digital travel companion
• In 2018, the company was listed on the Euronext Growth Milan Stock Exchange through an initial public offering (IPO), raising EUR 5.2 mn in the process.