Pricer: Growth tailwinds to continue in H2 - ABG

Operations continue to improve
Pricer continues to benefit from its strong position in the rapidly growing ESL market. Sales grew 35% y-o-y (vs. ABGSCe +34%), while adj. EBIT grew from SEK 3.5m in Q2’20 to SEK 22.6m (ABGSCe SEK 19.1m) as a result of the improved volumes. Orders grew 26% y-o-y to SEK 408m, driven by both previously announced framework agreements (e.g. related to CTDA and Carrefour) and ongoing operations. Pricer’s quarterly underlying order intake (i.e. unannounced orders) has now been >SEK 275m for four consecutive quarters, and we therefore believe that these are sustainable levels. We believe that Norway and Canada have recently performed particularly well, with the former being driven by a shift from segment labels to graphical labels, while the latter is being driven by increased ESL penetration. Although gross margins rose q-o-q due to an improved sales mix, they remained burdened by the distressed supply chain. We expect this to linger in H2 but to improve in 2022.

Estimate revisions: ‘21e EBIT flat, ’22-‘23e EBIT up 5%
Although EBIT was slightly above our forecast, we trim our gross margin assumptions for H2, yielding +0.1% on our ‘21e EBIT. For ’22-‘23e, we raise our order intake forecasts in light of a reinforced growth outlook. As such, we raise our sales and EBIT forecasts by 3% and 5%, respectively. Our EPS estimates are reduced due to hiked tax rate forecasts.

22% EBIT CAGR ’19-’23e, 28-16x ‘21-'23e EV/EBIT
We believe that Pricer will continue to see tailwinds from the rapidly growing ESL market over the coming years. For ’19-‘23, we expect the company to generate a CAGR of 22% in both sales and EBIT. The share is trading at 28x ‘21e EV/EBIT, which is about 25% above its historical EV/EBIT f12m valuation.

https://www.introduce.se/foretag/pricer/Equity-research/2021/7/pricer---growth-tailwinds-to-continue-in-h2/