Ogunsen: Good start to the year, EBIT up <100% y-o-y - ABG

Demand is holding up well initially in Q2
Small negative adjustments for ’22e-’23e
Share of recruitment revenues normalising in Q1

Q1: Sales +27% y-o-y, EBIT margin of 11.5% (6.6%)
Ogunsen reported Q1 sales of SEK 123m (SEK 97m), corresponding to y-o-y growth of 27% and 1% above ABGSCe. The deviation was driven by stronger staffing revenues than we anticipated. Recruitment revenues as a percentage of total revenues were 12%, unchanged y-o-y but down from 15% in Q4 (the recruitment revenues are generally lumpier than the staffing revenues). EBIT was SEK 14m (SEK 6.4m), for a margin of 11.5% (6.6%) and 4% below ABGSCe. We think that the deviation was driven by a lower share of recruitment revenues, which tend to have a higher margin contribution. Management says that demand remains good at the beginning of Q2, and it has not witnessed a change in customer behavior. We think that the company can handle a high inflation environment; the standard contracts in the staffing business come with a fixed margin that is adjusted for inflation. The risk that we see instead is how the company’s customers will act if the economy slows down, as the staffing industry tends to be cyclical in nature.

Slightly lower EBIT margin assumptions behind revisions
We keep our sales estimates more or less intact but lower our EBIT margin assumptions slightly on the back of the Q1 report. We assess that a lower share of recruitment revenues will lead to somewhat lower profitability levels. With that said, we think that Ogunsen is still heading for a solid ’22e, with revenue growth of 14% y-o-y and an EBIT margin of 10.7%, both above its financial targets. In total, our revisions lead to 2% lower EBIT for ’22e-’23e.
’22e P/E of 11x and expected dividend yield of 8.3% The share is currently trading at a ’22e P/E of 11x. Ogunsen has a strong balance sheet, with a net cash position close to SEK 80m. Since the business is capex light we expect the company to distribute most of its excess cash, with an expect ...
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Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/ogunsen/Equity-research/2022/5/ogunsen---good-start-to-the-year-ebit-up-100-y-o-y/