I-tech: Miss on numbers but cash put to use - ABG

- Sales -23% and adj. EBIT SEK -7m vs. consensus
- Elevated temp. costs and customer year-end inventory optimisation
- Dividend policy announced, 3% yield

Q4 results
Sales came in at SEK 25m (-21% vs. ABGSC 32m, -23% vs. consensus 33m), -16% y-o-y (-15% organic). EBIT was 0m (-107% vs. ABGSC 7m, -106% vs. consensus 8m), and adj. EBIT was 0m (-107% vs. ABGSC 7m, -107% vs. consensus 7m) for a margin of -2% (ABGSC +22%, consensus +21%). Adj. net income was 0m (-106% vs. ABGSC 6m, -106% vs. consensus 6m) for a margin of -1% (ABGSC +19%, consensus +18%). The company produced lease adj. FCF of -1m, -132% y-o-y. Overall a miss on the numbers with elevated costs due to efforts to secure secondary suppliers, year-end bonuses, and non-recurring costs due to the regulatory process in the EU. Management explains the lower sales with year-end customer inventory optimisations.

Estimates and outlook
We expect consensus will lower '24e-'25e sales by 5% and adj. EBIT by 10%. The company announced a dividend policy comprising an ordinary dividend of SEK 0.75 per share with an extra dividend of SEK 0.75 per share, corresponding to 88% of net profit for the year and a yield of ~3%. We find it positive that the company is finally putting its cash to use to reward shareholders. The company states that its biggest customer, Choguku Marine Paints, is growing its business within marine coatings with increasing profitability. We believe the long-term outlook remains unchanged but would like to see confirmation in Q1 that the Q4 dip was indeed temporary in nature.

Valuation
The share is up 21% L3M (vs. OMXSPI +13%) and is currently trading at 18-8x '23e-'25e EV/EBIT or 25-14x '23e-'25e P/E on our pre-report estimates. The company will host a presentation of the Q4 results at 09:00.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/i-tech/Equity-research/2024/2/i-tech---miss-on-numbers-but-cash-put-to-use/