Proact: Q4 better across the board - ABG

- Sales better than expected on tough comps (org -7% vs ABG -17%)
- Adj. EBITA +2% vs cons, solid CF and positive 2024 outlook
- ATH cloud orders in Q4, estimates slightly up, share to outperform

Q4 details
Sales SEK 1,360m (11% vs ABG 1,230m, 8% vs cons 1,259m). Adj. EBITA 91m (4% vs ABG 87m, 2% vs cons 89m), Adj. EBITA margin 6.7% (ABG 7.1%, cons 7.1%). DPS 2.00 (15% vs ABG 1.74, no cons). Organic sales growth -7% (vs ABG -17%), of which system sales declined -11% organically (tough comps) and services grew 2%.

ATH cloud orders in Q4 bodes well for 2024 growth
Cost reduction program bearing fruit, the margin miss stems from better system sales than expected (low margin). OCF solid at SEK 241m (355m Q4’22). Proact sees somewhat longer lead times for the system business, affecting consulting linked sales negatively. However, guides optimistically for 2024, with cloud revenues as an important driver. Contracted cloud orders in the quarter of SEK 197m was up 39% y-o-y and to a record high level. Proact reiterates targets of 10% annual growth and 8% margin, above consensus expectations (2024e growth of 4% and EBITA margin 6.9%).

Positive revisions and share to outperform slightly
Small positive revisions for 2024, around 2-4%, and the share likely to outperform the market today slightly, where valuation should be supportive (7.1x ‘24e EV/adj. EBITA). Conf call CET 10.00.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/proact/Equity-research/2024/2/proact---q4-better-across-the-board/