Boule Diagnostics: A small step forward - ABG

Component and logistic costs overshadow 34% org. growth
In Q2’21, Boule delivered sales that were 2% better than our expectations, as haematology markets start to return. Sequential growth was 10% and organic y-o-y growth was 34%, with improvement in all regions. Consumables sales, driven by OEM/CDS, were higher than expected, although current levels are still far from pre-pandemic numbers. Instrument sales were particularly strong in Asia, although total placement of 947 systems were slightly below our expectations (ABGSCe 1,050). Deliveries were hindered by component shortages, which together with increased transport costs and negative mix effect from high Asian instrument sales caused the lower gross margin at 41.6% (ABGSCe 42.3). The EBIT margin of 2.1% (ABGSCe 6.3%) was also impacted by increased sales activity and hiring costs.

The underlying trend shows signs of market recovery
While testing volume will not return immediately and elevated supply costs will continue to show in H2, the underlying trajectory looks solid. Demand from customers increased and Boule continued to expand its order book in the quarter. It is also now entering Q3 at unusually high levels. The US posted another strong quarter but parts of Asia are also indicating a strong return, showing evidence of normalcy on a regional basis. Vaccination rates and spread of mutated variants will be important to follow to ramp up confidence in a broader market comeback.

’22-23e EBIT up by 4%, ‘22e EV/EBIT 13.2x
Following today’s report, we assume continued near-term gross margin headwind and lower our ‘21EBIT with 19%. Underlying, we make minor positive revisions to our instrument and consumables assumption yielding 3-4% positive EBIT revisions for ’22-23e. Boule currently trades at ‘22e EVEBIT of 13.2x, 21% below its historical average.

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