C-Rad: Exceptional order intake - ABG

Order intake 35% better than ABGSCe Strength in APAC drove 9% sales beat Cons EBIT estimates likely to come up 5% Q2 numbers

C-RAD delivered results that was better than we expected. This was especially true for order intake that was up 46% y-o-y, and 35% higher than ABGSCe. It is mainly a result of its main product line, positioning products, performing remarkably with order intake growth of 77% y-o-y. We think that it may be driven by the supportive clinical guidelines from AAPM (Feb ’22) and ESTRO-ACROP (June ’22), pushing SGRT closer to standard of care. Revenues was also solid as it beat ABGSCe by 9%. This was mainly a result of navigating the challenging conditions in APAC well, and the regions sales beat our expectations by 62% and constituted all the sales beat. C-RAD says that China recovered slightly, and that the performance mainly stems from strong sales in other parts of the region. Operating expenses came in 8% higher than expected but is in large explained by a non-recurring effect of changing the CEO of SEK 1m, more sales activities (as ESTRO) and FX lifting opex by 0.8m. Despite this, it still managed to post a positive EBIT of SEK 0.8m. This represents an EBIT margin of 1.3% (9.8%).

Outlook and estimates Consensus EBIT estimates are likely to come up ~5% on the back of this to reflect a majority of the high order intake converting to sales over the next year. We expect the challenging conditions in China to subside. Varian, a major linac manufacturer, has faced similar China issues, with lower installations. However, it in May reiterated its full year guidance as it expects to recover lost volumes in H2. We are a bit cautious than Varian on the China linac market based on our discussions with Elekta. However, we believe that large share of missed H1’22 installations can be recovered. Considering C-RAD’s products are often installed in conjunction with new linacs, we believe that it too should benefit in H2.

Conference call There is a conference call at 1 ... Läs mer på ABG Sundal Collier

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/c-rad/Equity-research/2022/7/c-rad---exceptional-order-intake/