Christian Berner Tech Trade: Time to ramp up acquisition pace - ABG

Sales 7% above our expectations… …but adj. EBITA 23% below Management intends to ramp up M&A pace

Q2 results CBTT delivered sales of SEK 214m (+7% vs. ABGSCe), up 14% y-o-y whereof 10.5% organic. Management says that activity in the group’s markets remains good, reflected in order intake being up 23% y-o-y. However, margins remain under pressure. The adj. EBITA was SEK 11.6m (-23% ABGSCe), up 45% y-o-y, corresponding to a margin of 5.4% (4.3%) vs. ABGSCe at 7.5%. Soft operating cash flow at SEK -18.8m (16.5m) due to partly intentional buildup of NWC. Management has due to the large order backlog and strained supply chains built up somewhat larger inventory stock to secure its exiting delivery commitments and prepare for H2’22.

Estimate changes and outlook On isolated numbers, ‘22e EBITA estimates comes down 6%. Management expects contiued pressure on the gross margin in H2’22 due to material supply shortages. On the postive side, management highlights that it looks forward to increasing its acquisition rate in the future, although highlighting difficulties to agree with sellers on price levels for the time being. Finally, Henrik Nordin has now started as the group’s new CFO, thus replacing interim CFO Lars Westlund.

Final thoughts The share trades at 7.5-6.6x ’23-24e EV/EBITA on our pre-report estimates and yesterday’s share price.

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