Careium: The comeback chronicles - ABG

Q3: solid organic growth and strong margin improvement
Positive revisions continue on further proof of recovery
Trading at 5x '24e EV/EBITA


Top-line growth remains stable, EBIT improvements continue

Careium provided further evidence of their turnaround from last year, delivering solid top-line growth of 18.4% y-o-y organically, primarily driven by strong product sales in the Nordics and UK & Ireland. However, the key highlight was the strong margin development (even though FX supported a bit temporarily), prioritising securing profitable connections in Services, and further optimising the cost base. As a result, EBIT improved significantly, rising to SEK 20.7m (up from -18.2m Q3'22, +42% q-o-q), corresponding to a margin of 9.5% (-10.8% Q3'22, +2.7pp sequentially). Costs have come down on successful implementations of efficiencies, especially regarding alarm system deliveries, with opex decreasing slightly q-o-q, boosted by FX tailwinds and lower component costs. FCF amounted to SEK -9.8m (SEK 7.7m Q2'23), negatively affected by temporary WC tie-up. However, following the strong earnings recovery, the y-o-y improvement was significant (SEK -34m Q3'22), and we expect WC to normalise in the coming few quarters (WC tie-up was not inventory-related).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/careium/Equity-research/2023/10/careium---the-comeback-chronicles/