Ework Group - Robust Q4 and new financial targets - ABG

Q4 results
Q4 sales of SEK 4,687m (+2% vs. ABGSCe 4,596m), up 21% y-o-y. Gross profit was SEK 173m (+1% vs. ABGSCe SEK 171m), +21% y-o-y, while EBIT was SEK 55m (-8% vs. ABGSCe 59m), +30% y-o-y. The deviation in EBIT vs. ABGSCe was explained by higher D&A than expected, as opex was largely in line. DPS SEK 6.5/share (+30% y-o-y vs. SEK 5.0 in '21).

Q4 thoughts
Strong set of Q4 numbers, with all geographical markets contributing to the growth (Poland continues to grow particularly well). As such, the Nordic IT services market healthy in Q4, although we note that Ework's orders saw slightly decelerating metrics (+13% y-o-y, vs. 18% in Q3). Furthermore, Ework continues to show operational leverage on opex, which we find encouraging. In terms of outlook, Ework says that it expects to grow faster than the market in 2023 and continue to expand the operating margin.

New, forward-leaning financial targets
In conjunction with the Q4 results, Ework stated new 2025 targets: >30% annual EPS growth, and a payout ratio of >75%. We are encouraged by the new, forward-leaning targets, and expect to hear more during the conference call at 13.00 CET. While we do not expect the Q4 numbers alone to trigger any material estimate revisions for cons. on EBITDA (EBIT could come down on higher D&A), the new financial targets could potentially entail estimate upgrades.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ework/Equity-research/2023/2/ework-group---robust-q4-and-new-financial-targets/