Pricer: Broad-based growth set to continue in H2 - ABG

Q2: better sales and gross profit, but shortfall on EBIT We cut ‘23e EBIT by 20% on lower GMs and higher opex ’23e EV/EBIT of 18x, 22% ’21-‘24e sales CAGR Sales grew 36% y-o-y (+12% vs. ABGSCe)

With tailwinds from the current inflationary environment coming as retailers increasingly look to digitalise, Pricer delivered a strong Q2 in terms of sales and orders. Sales were SEK 530m (+12% vs. ABGSCe), up 36% y-o-y, driven by multiple geographies and customers, which is positive, as Pricer has occasionally had a high customer concentration. Orders of SEK 581m saw 42% growth y-o-y (-1% vs. ABGSCe), of which we calculate an underlying order intake (excl. announced orders) of 49% y-o-y. The gross margin of 16.6% (ABGSCe 17.0%), however, remained on its declining trajectory due to elevated freight costs, FX and increased component prices. Because of the gross margin pressure and opex growing 30% y-o-y, EBIT was SEK -7m, down from SEK 23m in Q2’21.

Negative EBIT estimate revision trend continues We lift ‘22e-‘24e sales by 1-2% following the better-than-expected Q2 deliveries. We continue to expect a strong ESL market in H2, and note strong growth for most ESL players in recent quarters. However, our positive sales revisions are offset by lower gross margins and increased opex assumptions, driving 20-12% cuts on ‘23e-‘24e EBIT.

Cost savings to support margins in 2023 On our new estimates, the share is trading at 18x ‘23e EV/EBIT vs. its L4Y f12m avg. of 21x. Although the outlook for when gross margins will stabilise is uncertain, we expect Pricer to grow rapidly in the coming years with a ’21-‘24e sales CAGR of 22%. Here, we think that Pricer’s growth will benefit well from the recent market launch of four-colour ESL. Furthermore, we see a tailwind to EBIT from its recently initiated cost-savings measures, which should come to fruition in 2023.

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