Careium: Time to prove the turnaround - ABG

Q4e adj. EBITA breakeven and 14% org. growth
Limited '23e-'24e adj. EBITA revisions, but net profit down
Trading at 11x '23e EV/EBITA - share is up 11% YTD


Q4e to deliver decent growth and improved margins

We forecast Q4 sales and adj. EBITA of SEK 191m and 0m, respectively, corresponding to y-o-y growth of 18% (14% organic) and a margin of -0.2%. The last few quarters have been tough, especially Q3, with a -7% adj. EBITA margin and SEK -34m in free cash flow, which resulted in breached covenants. The main explanation is the UK operations, which have been under significant pressure on costs, partly as the transformation is taking more time than anticipated. We believe Q4 will show improvements, with total sales coming up 9% q-o-q, a bounce-back in the gross margin, which was particularly weak in Q3, and adj. admin. costs coming down. On sales, we expect Q4 to be seasonally strong, and the margins should be supported by lower component/freight costs coupled with a trend towards a normalisation of the UK service delivery costs. There is still a long road back to normalised margins, but we think that Q4 will be a step in the right direction coming from unappealing levels.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/careium/Equity-research/2023/2/careium---time-to-prove-the-turnaround-/