Clavister: Q1 a tad soft, but outlook remains solid - ABG

Q1 slightly below expectations, sales -8% vs ABGSCe
We cut ‘23e and ‘24e EBITDA by 29% and 21%
Share trading at 18x and 11x EV/EBITDA on ‘23e and ‘24e

Sales and order intake on the softer side in Q1
Clavister grew sales by 7% y-o-y in Q1 (+2% FX adjusted), vs. ABGSCe of +16%. Total sales of SEK 33m (31m) was 8% below ABGSCe of SEK 35m. Order intake was SEK 37m, for y-o-y growth of 2%. Order growth was muted by a tough comparable quarter (elevated by large one-time orders). On a rolling twelve-month basis, however, order intake is up 22% y-o-y. The gross margin of 81% was 5pp below ABGSCe at 86%, owing to higher hardware costs. Opex was flat y-o-y and down vs. Q4’21 despite investments in sales and marketing throughout 2021. This was because of the cost optimisation programme launched in Q4, which is going according to plan. With the programme, Clavister is reducing redundancy and making the organisation flatter and more focused. The aim is to reduce the run-rate cash opex in Q4’21 of SEK 196m to SEK 164m by Q4’22. Q1 EBITDA was SEK -5.4m vs ABGSCe of SEK -0.4m, mainly explained by lower gross profit.

Significantly improved cash position, reducing financial risk
Clavister also strengthened its cash position significantly in Q1, reducing the financial risk. It has renegotiated terms for the EUR 20m EIB loan and will now repay the loan in small tranches until 2026 instead of paying back the entire loan in 2023 and 2024. It also received SEK 50m in COVID-19 related tax payment support (will be paid back later). Lastly, the SEK 10m convertible loan due in 2022 has been moved to 2027. In terms of estimates, we cut sales and gross profit slightly, which translates into 29% and 21% lower EBITDA for ‘23e and ‘24e.

New fair value range of SEK 4-14 per share (5-16)
We cut our fair value to SEK 4-14 (5-16) per share on lower estimates and lower peer multiples but maintain an optimistic view. Activity in the defence sector has increased significantly since the war in Ukraine broke out,
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Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/clavister/Equity-research/2022/5/clavister---q1-a-tad-soft-but-outlook-remains-solid/