Careium: Turning to profitability - ABG
Q4 well above our expectations, mainly on margins
Weak CF, but driven by the "right" reasons
Share is trading at 11x '23e EV/EBITA on our pre-Q4 ests.
Q4: solid top line and margin turnaround
Careium delivered sales of SEK 196m (3% vs. ABGSCe 191m), 12% q-o-q and +15% y-o-y organically ex. FX (ABGSCe 14%), driven by continued wins and implementation of new contracts in mainly Sweden, supporting the Nordic connections, but also an appealing performance in e.g., The Netherlands. In addition, UK delivered strong product sales, just like we have seen over the last few quarters, driven by the digital transformation in the region. Looking at the segment split, product sales was better than our expectations, and service sales was largely in line. Furthermore, we note that the number of subscribers decreased by 27,000 q-o-q primarily due to the loss of a few customers in UK, but remember that Careium's transformation includes avoiding "lowest price strategy" in tenders. Adj. EBIT including IAC’s reached SEK 9m (vs. ABGSCe -4.8m), for a margin of 4.7% (ABGSCe -2.5%, -9.1% in Q3’22) which is driven by improvements across the board, including strong top line development, gross margin rebound, and a steep sequential reduction in adj. opex.
Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/careium/Equity-research/2023/2/careium---turning-to-profitability/