Bredband2: 12% EBITA beat on lower costs - ABG

Q4 results
Sales SEK 403m (0% vs ABGSCe 403m), EBITDA 71m (6% vs ABGSCe 67m), EBITA 44m (12% vs ABGSCe 39m), EBIT 36m (13% vs ABGSCe 32m), EPS 0.03 / share (11% vs ABGSCe 0.02 / share). DPS SEK 0.09/share (ABGSCe SEK 0.10/share). FCF excl. leasing was SEK 55m (ABGSCe SEK 37m).

Q4 thoughts
Bredband2 delivered sales in line with our forecast, with a better customer intake offsetting a lower ARPU, likely driven by price discounts. The customer intake was +2,000 q-o-q (vs. ABGSCe -1,500) - a solid intake, despite management's cautious wording in conjunction with the Q3 report. Sales grew 5% y-o-y growth (vs. +5% y-o-y in Q3), driven by price increases that were implemented earlier in 2023. The gross margin of 35.1% improved from 34.5% in Q3 (ABGSCe 34.8%), which is encouraging given the price discounts. Ultimately, the EBITA margin came in at 10.9% (ABGSCe 9.8%), up from 8.4% in Q4'22. Bredband2 does not give any firm outlook, but is upbeat on 2024, partly on the back of recent M&A (Stockholm Stadsnät was consolidated as of 1 Feb'24).

Valuation and estimate changes
Bredband2's share is +28% L3M and is trading at 11x EV/EBITA on our unrevised 2024 estimates. Meanwhile, the lease adj. FCF is 9%. Following the Q4 numbers, we expect consensus to lift '24e EBITA by ~3% on lower costs.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/bredband2/Equity-research/2024/2/bredband2---12-ebita-beat-on-lower-costs/