Projektengagemang: Impressive cost control in Q4 - ABG

Q4: 1% organic sales growth, adj. EBITA margin of 7.3% (5.5%)
Projektengagemang (PE) showed continued improvement in Q4. Net sales of SEK 252m was down 3% y-o-y, but up 1% organically, which was in line with ABGSCe. Profitability was clearly better than expected, however, with an adj. EBITA margin of 7.3% (5.5%) vs ABGSCe at 4.4%. This impressed us as we know that the real estate and construction market is challenging right now, especially for architects, and PE has a 90% exposure to that. The deviation to our numbers was mainly from better cost control, and we notice a decrease in personnel costs y-o-y despite similar amounts of FTEs. This tells us that either the turnover rate has decreased or that PE has hired younger talents with lower wage requirements. Another positive was that the struggling Installation business area saw a sharp improvement in Q4. The board proposed a dividend of SEK 0.40 (LY: 0.40), as the leverage situation is still hovering around its target.

Cost savings programme can save SEK 20m yearly from 2026
In addition to the strong report PE also announced a cost savings programme for optimising office space, with an aim of yearly cost savings of SEK 20m from 2026 and onwards. The improvement will be gradual from 2023-2025 and makes us more positive about the trajectory towards the margin target of an EBITA margin of 10% as we now forecast close to 8% for '25e. Moreover, we keep our '23 sales estimates flat but increase EBITA by 10% on the back of the better cost control in Q4.

New fair value range of SEK 16-27 (14-25)
We raise our fair value range to reflect our estimate revisions. The company trades at an P/E of 9x and an EV/EBIT of 10x on our revised numbers for '23e and we look forward to seeing how it can perform with better market conditions.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/projektengagemang/Equity-research/2023/2/projektengagemang---impressive-cost-control-in-q4/