Cavotec: The road towards profitability continues - ABG

Cost headwinds persist, share issue strengthens cash position
3.3-9.2% EBIT margins vs. 6.3-10.4% previously in 2023e-2024e
25-7x EBIT '23e-'24e, 17% org. sales CAGR '22-'25e


48% org. sales growth, EBIT to turn positive in Q2'23e

Cavotec delivered continued strong order intake (backlog up 49% y-o-y) and improving backlog conversion, as sales grew 48% organically (ABGSCe 46%). We believe that the timing of deliveries in the backlog mean that we should start to see significant sales growth, and forecast ~40-30% organic sales growth in Q1-Q2'23e. However, cost headwinds (related to both internal inefficiencies, low-margins on orders in the backlog and external cost inflation) led to an EBIT loss in the quarter, as well as negative ~EUR 4m in lease adj. FCF. The near-term balance sheet risk was lowered as a result of the EUR 15m rights issue, and we expect positive EBIT to help lower leverage from Q2'23e, while FCF should be positive from Q3'23e.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/cavotec/Equity-research/2023/3/cavotec---the-road-towards-profitability-continues/