Careium - A (huge) step in the right direction - ABG

Q4 was surprisingly strong on all items
We raise '23e-'24e adj. EBITA by 28-13%
Share is trading at 9-7x '23e-'24e EV/ adj. EBITA


Q4 a significant relief for the market

We believe that the market feared a defensive equity issue to save the company from restructuring (given the negative margins trending downwards over the last few quarters), so the impressive Q4 turnaround was likely a huge relief. The top line remains strong, with consistent FX adj. organic growth of ~15%, driven by compelling service performance in the Nordics (especially Sweden) and solid UK product sales. The cost situation seems to have normalised (but much faster than we thought), supporting a decent adj. EBITA margin in the quarter of 7.1%. The cash flow looked concerning, especially given the balance sheet situation with high gearing and a broken bank covenant in Q3'22, but management emphasised that the situation is under control, and that the SEK -53m in FCF was temporary.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/careium/Equity-research/2023/2/careium---a-huge-step-in-the-right-direction/