C-Rad: Record heat on orders beat - ABG

Remarkable order intake 35% better than ABGSCe ‘23e EBIT up 8% and ‘24e up 4% Fair value range of SEK 45-95/share Orders up 46% y-o-y, 77% growth in positioning products

With its exceptional order intake, C-RAD was the opposite of a rather soft Q2 radiotherapy market. Orders beat our estimates by 35% and were up 46% y-o-y, against tough comps of 24% organic growth. Its main product line, positioning products, grew its order intake by 77%. We think this has to do in part with accelerating adoption rates because of recent clinical guidelines from AAPM and ESTRO-ACROP that support the implementation of SGRT in the US and Europe. However, APAC showed the most remarkable growth in orders, at 88%. We expect that this is a result of the decision to establish local presence in India a year ago to support South Asia sales along with stalled Q4/Q1 tenders in Australia being finalised. Sales were also better than expected (+9% vs. ABGSCe), largely as a result of the non-China performance in APAC. Despite record gross margins and decent sales, EBIT margins declined from 9.8% in Q2’21 to 1.3% as opex swelled by 26% y-o-y. FTE’s increased by 9%, FX added 3pp and there is a NRI related to the CEO departure that adds another 3pp. The remaining 11pp is from increased costs for sales activities (such as ESTRO) and salary increases.

Elekta has been cautious on market activity in China We lift sales by 3% for ‘22e, 5% for ‘23e and 4% for ‘24e. The bump in ‘23e is mainly from the delivery of the EU tenders, with Spanish orders that should be delivered in H2’23. We lift ‘23e EBIT by 8% as the sales drop-through more than offsets assumed opex increases. China should be the biggest swing factor for H2’22e. We have assumed only a modest recovery given the recent cautious market commentary from Elekta.

70% below its peer group at 12x ’23e EV/EBIT C-RAD is one of the fastest growing companies in its peer group (using FactSet consensus), with a 50% EBIT CAGR in ’20-’25e. It is trading 70% below pe ... Läs mer på ABG Sundal Collier

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