Alcadon - Germany ramping up, UK strong as well - ABG

Q4 results
Sales were SEK 401m (+2% vs. ABGSCe 394m, +5% vs. Bloomberg cons. 381m), up 94% y-o-y (5% org, 86% M&A, 3% FX) The gross margin improved sequentially to 25.3% (ABGSCe 24.0%, cons 24.3%), a result of moving on higher input costs to customers. This, in combination with an offsetting effect from increased overhead, resulted in an adj. EBIT of SEK 24.7m (+8% vs. ABGSCe 22.8m, +9% vs cons. 22.7m), for a margin of 6.2% (ABGSCe 5.8%, cons. 6.0%). This included positive NRIs of SEK 0.8m (-0.8m from realised FX effects, +1.6m from previously set aside contingent consideration in Belgium). The NWC acquisition in UK continued its strong tred in the quarter (sales +6% vs. ABGSCe), largely thanks to growth in data centres. Germany saw notable sales ramp-up to SEK 18m (ABGSCe 16m), while Norway and Denmark came in below expectations.

Estimate changes
We expect consensus EBIT for '23e-'24e to come up by ~2-3%.

Final thoughts and valuation
On our pre-Q4 estimates, the share is trading at 14x '23e EV/EBIT, offering a '21-'24e adj. EBIT CAGR of 31%. We view this quarter as a clear step in the right direction with increasing deliveries in Germany, where Alcadon had faced some struggles in prior quarters. Also, we are seeing gradual margin improvement, although still not back to historical levels.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/alcadon/Equity-research/2023/2/alcadon---germany-ramping-up-uk-strong-as-well/