Pricer: Strong earnings despite order delays - ABG

- Order intake -4% y-o-y on customer delays
- We cut '24e-'26e sales by 7-5% but increase GMs
- EBIT to recover well in 2024e, 12x '24e EV/EBIT

Order intake and sales greatly affected by customer delays
Pricer delivered a weak Q2 report on sales, but a strong quarter in terms of profitability. Sales were SEK 644m (-12% vs. ABGSCe), mainly driven by a 34% y-o-y decrease in America and a flat Nordics and Asia & the Pacific. Moreover, Q2 delivered the lowest order intake since Q1'22, at SEK 498m (-4% y-o-y and -29% vs. ABGSCe). As we highlighted in our Q2 preview, orders were affected by a delay from key customers. While this impact was greater than expected, we estimate order intake increase in H2, partly on recovered demand as well as easy comps (SEK 523m in Q3'23). The gross margin improved to 23% (vs. 16% in Q2'23 and 19% in Q1'24) due to a favourable product and customer mix and lower component costs. As previously noted, the customers who delayed orders tend to have an unfavourable effect on the GM mix, and as such, we reamin positive about the GM trajectory, but we expect a slight sequential normalisation in Q3. With the improved gross margins and lower opex (-13% y-o-y due to recent cost savings), EBIT increased to SEK 49m (vs. SEK -3m in Q2'23 and SEK 21m in Q1'24).

Estimate changes
We cut '24e-'26e sales by 7-5%% after the report, and we increase gross margins by 1.8-0.5pp, resulting in changes to '24e, '25e and '26e EBIT of +3%, -3% and -6%, respectively.

2024e to be a record year for EBIT
We estimate '26e sales of SEK 3.6bn, corresponding to a '23-'26e sales CAGR of 11%. Together with more gross margin improvements and declining opex, we expect Pricer to report 2024e adj. EBIT of SEK 166m - a sharp increase from the SEK 35m in 2023. The share is trading at 12x EV/EBIT on our updated 2024 estimates.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/pricer/Equity-research/2024/7/pricer---strong-earnings-despite-order-delays/