Projektengagemang: R12-month EBITA on the rise - ABG

Still looking for growth but signs are promising
Feels like we have been one quarter too early
New fair value range of SEK 20-33 (20-35)

Q1: Sales -11% y-o-y (-5% organic) but better profitability
Projektengagemang (PE) reported Q1 net sales of SEK 250m (282m), -11% y-o-y and -5% organically. We had higher expectations and sales were 7% below ABGSCe. The company is still facing a tough recruitment market that is characterized by high turnover, making net recruitment hard to achieve. However, PE had positive net recruitment in two out of three segments if we adjust for the divested Indian operations. The deviation from our estimates was partly from lower net recruitment and partly from substantially higher sick leave than normal, the latter reducing sales by ~5pp in the quarter. Despite the lower sales, EBITA improved to SEK 20m (18.2m) for a margin of 8.0% (6.5%), and it was 6% below ABGSCe where the deviation stem from the lower sales. In the conference call, the company said it has already started to raise prices in Q1 as a response to the high inflation we are currently seeing. However, as salary increases will mainly be from April, we are a bit cautious when forecasting profitability for the remainder of the year.

Estimate cuts mainly from lack of net recruitment
Our sales estimates have been falling for the last couple of quarters and it feels like we have been one quarter too early for some time, mainly as the company seems to have improved its pace of hiring but has experienced unusually high employee turnover. We think the signs are there for a turnaround with improving eNPS numbers and more numbers of employees on board at the end of the quarter than at the start. However, the Q1 deviation makes us lower the speed of this, and we lower sales by 8% for ‘22e-‘23e. We lower EBIT slightly more as we think it will be harder to improve profitability in the coming quarters as the company also needs to balance rising wages.

‘22e P/E of 12x, expected dividend yield of 4.7% ...
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Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/projektengagemang/Equity-research/2022/5/projektengagemang---r12-month-ebita-on-the-rise/