Projektengagemang: A winding road ahead - ABG

We expect a return to sales growth in '23eTough market but a reluctancy to hit the brakesImpressive work with Employer BrandingQ1e: Sales +2% y-o-y and adj. EBITA margin of 6.7% (8.0%)We expect Projektengagemang (PE) to finally return to sales growth in Q1 after three years of declining sales. We forecast sales of SEK 255m (250m) for 2% y-o-y growth. Unfortunately, we think it will be harder to improve profitability as the Swedish construction market is quite challenging and the company has indicated a reluctancy to slow its hiring pace due to fears over long-term negative effects, as was the case after the Covid-19 setback. We expect an EBITA of SEK 20m (17m) for Q1. Aside from the financial results we notice an impressive improvement for PE in its Employer Branding as it received very good result in the Student category of Universums ranking of the most attractive employers in 2023. In the BSc Engineering ranking, it went from 79th place to 19th, and in the MSc Engineering ranking it went from 94th place to 37th.'23e EBITA down 19% as market conditions worsenThe decision to continue to hire despite tough market conditions will probably lead to lower profitability in the short term via a lower utilisation rate. It is the main reason for our 19% cut to '23e EBITA. We also lower our '23e sales slightly as we expect the hiring pace in the architecture division to be slower than previously anticipated as the market conditions in this space have worsened even more than before.New fair value range of SEK 14-25 (16-27)We would again like to mention all the improvements PE has undergone recently, which it is yet to benefit from as it navigates through increasingly tougher market conditions. It has raised both its NPS and eNPS significantly, stabilised profitability and started to grow FTEs organically q-o-q again. Although we lower our fair value range to reflect our estimate changes, we think PE will stand strong once the market improves.Läs mer på ABG Sundal Collier