Ework Group: Good performance, but we fear a weaker Q2e - ABG

Solid start to 2023, but weakness in some industries
We lower '23e-'25e sales by 2-1%
14% adj. EBIT growth in '23e, share trading at 15x '23e EV/EBIT


Sales +16% y-o-y – strong automotive, soft telecom and retail

Ework had a solid start to 2023, posting Q1 y-o-y sales growth of +16% (-1% vs. ABGSCe), of which ~0% stemmed from higher prices (vs. 6% in Q4, hurt by an unfavourable geographical sales mix) and 16% from increased volumes. That said, prices on new contracts were up ~5%. As in Q4, we conclude that there are signs of a slowdown in some industries (e.g. retail and telecom, which together account for ~20% of Ework's business), while overall demand remains solid, including a healthy automotive market. In terms of regions, sales in Norway grew by just 1% y-o-y (orders -12% y-o-y), as some customers remain hesitant due to the recent discussion about the legislative process regarding freelancers. We expect this weakness to linger in Q2. Poland, however, continued on its recent positive trajectory (orders +40% y-o-y), partly driven by the current inflationary environment as companies look to source consultants outside the Nordics. Although opex grew 25% y-o-y, Ework was able to increase EBIT to SEK 54m (vs. ABGSCe SEK 53m), +14% y-o-y.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ework/Equity-research/2023/4/ework-group---good-performance-but-we-fear-a-weaker-q2e/