Christian Berner Tech Trade: Looks like a decent quarter - ABG

Q2 report due Thursday, 18 August Margins to improve 220bp y-o-y FVR of SEK 27-37 reiterated Final settlement of heating projects to support volumes

For Q2, we expect sales of SEK 200m, up 8% y-o-y, of which 6% organic. The organic growth should be supported by 1) easy comps with -5% org sales growth in Q2’21, 2) strong order intake with a Q1’22 R12m book-to-bill of 1.03, 3) price increases to offset cost inflation, and 4) final settlements of several major heating projects, which were delayed in Q1’22 due to component shortages and longer delivery times. However, we expect longer lead and delivery times to continue dampening the volume growth partly. Besides adding volumes, the major heating projects should also support earnings. We estimate an adj. EBITA of SEK 15m, corresponding to a margin of 7.5% (5.3%). We estimate segment Process & Environment to deliver sales of SEK 140m, up 9% y-o-y (6% org), with an EBITA of SEK 11m, translating into an 8.0% margin (5.2%). For the Materials Technology segment, we expect sales of SEK 60m, up 6% y-o-y (5% org), with an EBITA of SEK 7m, corresponding to a margin of 11.0% (10.6%).

23% ’21-‘24e adj. EBITA CAGR We leave our ‘22e estimates unchanged but lower ‘23e-‘24e sales and adj. EBITA by 2% on a softer economic outlook. We now estimate a ’21-‘24e adj. EBITA CAGR of 23%. The balance sheet remains relatively solid, and we forecast the ‘22e 1.8x ND/EBITDA to decrease to 1.1x in ‘23e and 0.8x in ‘24e. Due to the transition of management in H1’22, we expect to see little M&A activity this year. However, with Ms Reuterskiöld’s experience from Lagercrantz, we expect acquisitions to be made more frequently in the longer term (CBTT historical average of one per year).

9-7x ‘22e-‘23e EV/EBITA The share is trading at 9-7x ‘22e-‘23e EV/EBITA. We reiterate our fair value range of SEK 27-37 per share, corresponding to 9-11x ‘23e EV/EBITA.

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