Pricer: Ends 2022 on a record-high level - ABG

Q4 sales of SEK 696m were 8% above ABGSCe
With its strong order backlog and recent production data from ESL supplier E Ink, the outlook for improved deliveries in Q4 was good. Pricer capitalised well on these prospects, with sales +43% y-o-y, to SEK 696m, 8% above ABGSCe of SEK 642m. Meanwhile, orders continued to rise, growing 43% y-o-y (+6% vs. ABGSCe). In terms of regions, Canada and France remained strong, supported by previously won framework agreements (e.g. Carrefour and CTDA), but smaller customers also contributed to the growth: we argue that the breadth bodes well for more growth. That said, the gross margin of 15.5% (ABGSCe 16.5%) contracted from 16.6% in Q3, with continued headwinds from elevated freight rates, FX, and an unfavourable customer mix. Given recent FX movements (mainly EUR/USD), lower freight rates (-80% from the peak), and cheaper input prices, we expect gross margins to trough at current levels, and expand to 17% in '23e. EBIT of SEK 28m was well above ABGSCe of SEK 13m, but as this also included an FX revaluation of balance sheet items of ~SEK 24m, the beat was low quality.

More estimate cuts due to lower GMs
Although we raise '23e-'24e sales by 3%, we cut '23e EBIT by 17% on lower gross margin assumptions. That said, we hike '24e EBIT by 3%.

Good growth prospects in '23e-'25e
The current inflationary environment was a major tailwind for Pricer's 44% order growth in '22. Even if CPIs slow down in '23, we argue that the industry's recent progress is going to benefit the coming years. Meanwhile, the global penetration rate of ESLs remains low (<10%), while Pricer should gain from the further deployment of four-colour ESL tags, so we see prospects for Pricer to report a '21-25e sales CAGR of 23%.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/pricer/Equity-research/2023/2/pricer---ends-2022-on-a-record-high-level/